Visa Profit Rises, Changes Terms of Deal for Europe Business
April 21 2016 - 05:10PM
Dow Jones News
Visa Inc.'s earnings for the latest quarter rose 10%, though the
card company noted weak cross-border spending and said it hasn't
seen material improvements in economic trends.
Its shares declined 4.6% after-hours as the company said it is
amending its deal to buy European counterpart Visa Europe to
eliminate an earn-out provision.
That deal, intended to bring Visa's global operations under one
roof, was supposed to include up to €4.7 billion in payments,
triggered by the achievement of revenue targets following the
fourth anniversary of the deal's closing. Instead, the cash
consideration of the deal will be increased by €1.75 billion. The
deal was initially valued at up to €21.2 billion.
Visa also warned it sees weakness in China, Brazil, and oil
based economies.
"The continued headwinds of the strong U.S. dollar, lower oil
prices, and an uneven global economy are driving continued weak
cross-border spend, but domestic spend continues at reasonably
strong levels consistent with last quarter," Chief Executive
Charlie Scharf said.
In all, he company reported a profit of $1.71 billion, or 71
cents a Class A share, for the quarter ended March 31, up from
$1.55 billion, or 63 cents a Class A share, a year earlier.
Earnings, excluding one-time items, were 68 cents a Class A
share.
Revenue rose to $3.63 billion from $3.41 billion.
Analysts polled by Thomson Reuters projected earnings excluding
items of 67 cents a share on revenue of $3.6 billion.
Spending on credit and debit cards has been strong as consumers
migrate from cash and checks to electronic payments. Visa and
competitor MasterCard Inc. don't issue cards or set interest rates,
but they charge fees to financial institutions for transactions
that travel over their networks.
Visa has focused more on digital efforts lately 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.
Write to Josh Beckerman at josh.beckerman@wsj.com
(END) Dow Jones Newswires
April 21, 2016 16:55 ET (20:55 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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