Visa Earnings Drop On Acquisition Charges
July 21 2016 - 4:53PM
Dow Jones News
By Josh Beckerman
Visa Inc.'s earnings for its fiscal third quarter fell 76%, hurt
by charges tied to the acquisition of its European operations,
while revenue and payments volume rose.
"While little has changed in the global economic environment,
and cross-border commerce continues to be challenged by a strong
U.S. dollar, domestic consumer spend across the globe remains
strong and resilient," Chief Executive Charlie Scharf said.
The credit-card issuer also added $5 billion to its stock
buyback plan and unveiled a digital payment alliance with PayPal
Holding Inc. intended to make it easier for PayPal customers to pay
with Visa cards.
Visa has stepped up its digital efforts as consumers migrate to
electronic payments. Visa and other have supported Apple Inc.'s
Apple Pay service, and Visa invested in mobile-payments startup
Square Inc.
Under the deal with PayPal, consumers will be able to instantly
withdraw and move money from their PayPal and Venmo accounts to
their bank account via Visa debit cards.
In all, Visa reported a profit of $412 million, or 17 cents per
Class A share, for the period ended June 30, down from $1.7
billion, or 69 cents per Class A share, a year earlier. Excluding
one-time items related to its acquisition of Visa Europe, earnings
fell to 69 cents a share.
Revenue rose 3.2% to $3.63 billion, up 6% on a constant-dollar
basis, driven by improved payments volume.
Analysts polled by Thomson Reuters projected earnings of 66
cents a share on revenue of $3.65 billion.
Visa purchased Visa Europe Ltd. in June, a deal designed to
bring its global operations under one roof. The transaction was
initially valued at up to 21.2 billion euros ($23.4 billion).
Some of Visa's retailer relationships have become adversarial
over issues including fees and the advent of chip cards.
In June, a U.S. appeals court threw out a record-setting $7.25
billion antitrust settlement between Visa and MasterCard and
millions of retailers after determining that some merchants weren't
adequately represented.
Meanwhile, Wal-Mart Stores began blocking the use of Visa credit
cards at three Canadian stores this month in a fee dispute, while
another Wal-Mart conflict involves Visa's complaints that the
retailer secretly configured payment terminals so that only
personal identification numbers could be used.
Shares rose 0.3% to $79 after hours.
Write to Josh Beckerman at josh.beckerman@wsj.com
(END) Dow Jones Newswires
July 21, 2016 16:38 ET (20:38 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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