By Andrew R. Johson and John Kell
Shares of MasterCard Inc. fell as much as 6.5% in premarket
trading Friday after the payment network's results missed analysts'
expectations despite an increase in cardholder spending.
The miss was largely driven by a jump in payments it makes to
clients for agreement renewals and meeting volume goals.
The Purchase, N.Y., company posted a profit of $623 million, or
52 cents a share, up from $605 million, or 49 cents a share, a year
earlier.
Both periods reflect the company's 10-for-1 stock split, which
MasterCard announced late last year.
Revenue climbed 12% to $2.13 billion, boosted by a 13% increase
in processed transactions and a 18% jump in cross-border volume,
which measures payments made in one country with a card issued by a
bank in another country.
The results fell short of analyst estimates, who were expecting
the company to earn 60 cents a share on $2.14 billion in
revenue.
MasterCard's shares were down 5.3% at $75.50 in recent premarket
trading. Visa Inc. and American Express Co. shares were also down
in premarket trading.
MasterCard, the world's second-largest payment network after
Visa, operates a network that helps process transactions for banks
that issue its credit and debit cards and those that handle
transactions for merchants.
The results come a day after Visa reported an 11% jump in
payments volume, lifting net income by 8.8%. Visa's results topped
Wall Street expectations.
Cardholders made $1.1 trillion in purchases on MasterCard cards,
up 14% on a local-currency basis from a year earlier.
The increased spending was offset by higher rebates and
incentives, which MasterCard pays to banks and merchants when it
signs new and renewal agreements. The payments increased 23% in the
quarter to $925 million, the company said.
MasterCard also recorded a $61 million charge related to
litigation filed by merchants over transaction fees that retailers
pay each time a customer pays with a credit card. A federal judge
in December said he was granting final approval to a settlement of
the litigation, a deal valued at $5.7 billion.
Stripping out the charge, the company would have earned 57 cents
a share.
The settlement aims to put to bed lawsuits filed in 2005
accusing Visa and MasterCard of conspiring with banks to set the
transaction fees--also known as swipe fees--at arbitrarily high
levels. Several merchants and retail trade groups have opposed the
settlement, and are appealing final approval of the deal.
Write to Andrew R. Johnson at andrewr.johnson@wsj.com and John
Kell at john.kell@wsj.com
Order free Annual Report for American Express Co.
Visit http://djnweurope.ar.wilink.com/?ticker=US0258161092 or
call +44 (0)208 391 6028
Order free Annual Report for MasterCard, Inc.
Visit http://djnweurope.ar.wilink.com/?ticker=US57636Q1040 or
call +44 (0)208 391 6028
Order free Annual Report for Visa, Inc.
Visit http://djnweurope.ar.wilink.com/?ticker=US92826C8394 or
call +44 (0)208 391 6028
Subscribe to WSJ: http://online.wsj.com?mod=djnwires