Visa Earnings Soar: Is Plastic Regaining Its Appeal?

In a sign that consumer spending may be on the rebound, Visa (V) on Wednesday posted a fiscal fourth-quarter profit that jumped 51% from the year-ago quarter. The largest U.S. processor of credit-card payments also authorized as much as $1 billion in stock repurchases just one week after boosting its dividend.

But shares fell in extended trading after the company released disappointing guidance for the 2011 fiscal year. Visa forecast its 2011 revenue would range between $8.95 billion and $9.27 billion. The midpoint of the range, approximately $9.11 billion, would miss analyst expectations of $9.19 billion in sales. The stock declined 2.4% to $78 by about 7 p.m. Eastern time.

Visa's fourth-quarter earnings beat Wall Street expectations. Net income for the quarter, which ended Sept. 30, came to $774 million, or $1.06 a share, up from $514 million, or 69 cents, a year earlier. Revenue increased 13% to $2.12 billion. Analysts had expected earnings of 95 cents a share on $2.09 billion in revenue, according to a Thomson Reuters poll.

Visa cardholders spent 14% more on their cards than they did in the same quarter a year earlier, on 16% more transactions. The results were consistent with those of Visa's smaller competitor American Express (AXP), which last week reported its third-quarter profit surged 71% year over year.

"We continue to successfully execute on our strategic initiatives while in the midst of a very challenging business environment," Visa CEO Joseph Saunders said in a statement.

The company's buyback announcement, coming on top of the higher dividend, puts Visa on a long list of companies that have been rewarding shareholders with excess cash. Citigroup's Citi investment research recently predicted that stock buybacks will soon grow toward their 2007 levels, when companies bought back a record 5% of their market capitalization.

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mbc18650

Citi exploits customers with absurd rates and fees....24% and higher interest rates ......that isn't banking....its loan-sharking plain and simple....these people would have been bankrupt due to their fraud and incompetence and greed of they had to live by the free market or the rules they want their customers to follow....we bailed them out...they took billions in bonuses and keep govt rescued stock portfolios.... gouging customers is not business.... or the free market....no...it is an un-fair and deceptive business practise...just like changing proceedures and imposing multiple $39 fees on customers just trying to stay afloat... we need to ban interest rates over 18% and cap tax deductions for compensation at 1 million dollars per year...and have a higher tax rate for people earning over 1 million a year...on that extra income....to help pay for the harm done and for rebuilding America, providing education and health care....helping American Families, and reducing the deficit...

October 28 2010 at 10:53 AM Report abuse rate up rate down Reply
mbc18650

OF COURSE PROFITS ARE UP.....CITI AND OTHER CREDIT CARD COMPANIES AREN'T BANKS THEY ARE LOAN SHARKS.......36% INTEREST RATES..... AND WHEN PRIME IS 2%......ANYTHING OVER 12% IS NOT BANKING.... ITS LOANSHARKING.... WE NEED A LAW PROHIBITING RATES HIGHER THAN 18% OR TRIPPLE PRIME....WHATEVER IS LOWER.... AND A REQUIREMENT THAT FEES ONLY COVER THE COST INVOLVED.... INSTEAD OF ANOTHER WAY TO GOUGE CUSTOMERS.....ENOUGH FINANCIAL CRIMINAL ACTIVITY....AMERICAN FAMILIES ARE BEING VICTIMIZED...

October 27 2010 at 9:49 PM Report abuse rate up rate down Reply
1 reply to mbc18650's comment
georgii1

Now, there was an attempt to cut those rates, but they couldn't get support for it from friends of financial lobbyist in Washington, so the next best option would be for consumers to cut their spending. Matter of fact, I thought folks were cutting back on use, but apparently not. Course, I have noticed an increase in card offers lately and that might be luring people back in.

October 28 2010 at 9:21 AM Report abuse rate up rate down Reply