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Blackhawk Network issues 1st report as public co.

PLEASANTON, Calif. (AP) -- Blackhawk Network Holdings Inc., the gift card and prepaid card spinoff of supermarket chain Safeway Inc., reported a drop in its first-quarter net income as it had previously forecast.

The Pleasanton, Calif. company went public in mid-March raising $230 million after years under Safeway's umbrella. It sells gift cards from Amazon.com, iTunes, Macy's and Starbucks to consumers, as well as prepaid reloadable cards that can be used much like debit cards but without a checking account.

Safeway still owns about 76 percent of Blackhawk's common shares.

In its first report since going public, Blackhawk delivered net income of $346,000, or 1 cent per share, for the period that ended March 23. That is compared with net income of $2.9 million, or 6 cents per share, in the same quarter last year.

The company said the decrease was due primarily to an increase in commissions paid to distributors of the cards, as well as increased marketing and distribution partner expenses.

Blackhawk said that after adjusting for a number of special items affecting the quarters, it earned income of $1.9 million versus $4 million.

Its revenue increased to $185.1 million from $151.5 million. The quarter's results were in line with what Blackhawk had laid out in its prospectus prior to the IPO.

Blackhawk CEO Bill Tauscher said that demand for the company's prepaid products was strong during the quarter, with load value on the cards increasing 23 percent to $1.6 billion. Its number of load transactions, or the number of times consumers loaded money on the cards, increased to 36,806 from 32,696.

Shares of the company fell 43 cents to $24.60 in midday trading.

The company priced 10 million shares for its debut at $23 each, above the expected range of $20 to $22. That suggested solid demand from investors. The company's stock price increased until Monday, when it peaked at $27 but has fallen since then.