NEW YORK -- TRW Inc. is considering selling its credit reporting business, in part because of the growing public outcry and regulatory scrutiny of the business of tracking and selling sensitive consumer financial data, says Joseph T. Gorman, TRW's chairman and chief executive.
In recent months, he said in an interview yesterday, he had become less convinced that the information services business made sense for TRW. "We need to take some strategic action" on the unit, which accounted for about 11 percent of sales in 1990.
The two main businesses of the Cleveland-based company are supplying parts for the auto industry and making such sophisticated space and military equipment as satellites.
The credit reporting business has come under fire from federal lawmakers, consumer groups and state attorneys general for publishing inaccurate data and selling sensitive consumer financial information to mass mailers and other businesses.
Last month, TRW was sued by attorneys general in several states for providing error-ridden information and selling data illegally. TRW has denied the charges. Congress is also considering a number of bills that call for stiffer regulation.
Gorman acknowledged the impact of the public scrutiny. "Of course it makes it less attractive," he said of the business, adding that the division had not done well financially in recent years.
James D. Dougherty, an analyst with County Natwest Wood Mackenzie, said: "This used to be a nice, murky business that was very profitable. Now it's going to be less profitable and more people are going to be watching it."
One costly proposal before Congress calls for the industry to supply a free annual credit report to consumers.
Dougherty said he was not surprised that TRW was considering selling its credit reporting business because it had recently taken a far less active role in trying to head off stiff regulation than had Equifax Inc., a credit reporting firm based in Atlanta.
Equifax recently announced plans to establish a customer service center in Atlanta to answer credit reporting questions and address consumer complaints.
Gorman contends that TRW has long been a leader in promoting responsible policies in the industry.
Dougherty said anti-trust issues would be likely to prevent Equifax from acquiring TRW's business. Gorman would not comment on whether discussions had been held with any companies.
John Ford, a spokesman for Equifax, said he was not aware of any discussions between the two companies.
Analysts said a divestiture would be a positive step for TRW. "It would be a good thing because it would mean that the company is further refocusing on just two core businesses," said Steve Binder, an analyst with Bear Stearns & Co.
The company had a disappointing year in 1990, and Standard & Poor's said TRW's earnings were expected to drop this year.