Monday, August 3, 2009

VISA (Richie Civello)

Visa Inc (NYSE:V - News) reported better-than-expected quarterly earnings on Wednesday(7/29), as the world's largest credit card network cut expenses and credit-strapped consumers used their debit cards more. Larger than expected cuts in advertising were a major component to the cost cuts.

The company also forecast revenue would grow more than expected in the fourth quarter helped by a recovery in the number of transactions.

Net income rose 73 percent to $729 million, or 97 cents per diluted class A share, for the third quarter ended June 30.

On an adjusted basis, reflecting a normalized tax rate, restructuring and purchase amortizations, quarterly net income rose to $744 million, or 98 cents per diluted class A share. True earnings per share were $0.67 per share; the difference coming from a one-time Brazilian IPO.

Overall revenues were in the expected neighborhood, Payments volume fell 5% but processed transaction volume increased 8% to 10.3 billion.
Our thesis with Visa is still: that increased transactions due to a shift from paper payments to plastic would lead to increased business and the shift from debit to credit card payment during these hard times would be beneficial to Visa.( Debt processing went up 3.6% this quarter, Credit Card payment volume decreased 10.4%). With the economy showing more signs of life Visa looks to still be a hold.

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