MasterCard 4Q Profit Beats Expectations

NEW YORK (AP) -- MasterCard Inc., one of the world's largest credit-card brands, said Friday its fourth-quarter profit topped Wall Street expectations as strong consumer spending boosted transactions. The results drove shares of MasterCard to an all-time high before tumbling in early trading.

The Purchase-based company, which went public in May 2006, posted quarterly profit of $41 million, or 30 cents per share, compared with a loss of $53 million, or 39 cents per share, a year earlier. Excluding the impact of litigation settlements, MasterCard reported a profit of $41 million, or 31 cents per share, in the latest period.

Revenue rose 17.2 percent to $839 million from $716 million a year ago.

Results surpassed projections for profit of 17 cents per share on revenue of $826.9 million, according to analysts polled by Thomson Financial. "We are quite pleased with our financial performance in the fourth quarter," said President and Chief Executive Robert Selander in a conference call. "We look forward to leveraging our momentum in the industry, and take advantage of our customer-focused strategy, to keep deliver these kinds of results."

This is the second earnings report since MasterCard went public. The company's $2.39 billion initial public offering was used to unwind holdings by thousands of U.S. banks that controlled the company, and it now counts hedge funds like Atticus Management LLC and mutual funds like Fidelity among its biggest investors.

MasterCard does not deal with consumers directly, but issues its brand to banks and other financial institutions and makes money from processing fees when consumers use credit or debit cards. The company also makes money from payment-related services.

It processed $532 billion in global transactions, up 14 percent from the year-ago period. The company said it issued 817 million MasterCard-branded cards as of Dec. 31, up 12 percent from the year-ago period.

Also Friday, Mastercard raised its quarterly cash dividend by 66.7 percent to 15 cents per share from 9 cents per share. The dividend is payable May 10 to shareholders of record on April 9.

The results come as stronger consumer spending has bolstered results from a number of MasterCard's biggest rivals. American Express Co. and Morgan Stanley's Discover card division all reported better-than-expected results from their credit card business.

Meanwhile, credit card businesses bolstered results from issuers like Bank of America Corp., JPMorgan Chase & Co. and Citigroup Inc.

Visa, which operates the biggest credit card network in the U.S., said in October it plans to sell shares to the public something this year. The company hopes to streamline its operations, and insulate its member banks from legal damages it faces over antitrust and unfair-pricing claims brought by merchants.

The IPO for MasterCard raised about $650 million to fund a war chest to protect itself from legal troubles. Selander said Friday there was nothing new to report in the way of settlements.

The stock soared to a high of $118.07 in the first few minutes of trading, before falling $2.97, or 2.6 percent, to $111.76 in morning trading. The stock has doubled since going public.