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MasterCard Posts Loss Fueled by Settlement

MasterCard (MA - Get Report) shares surged more than 7% in after-hours trading, despite reporting a net loss for the third quarter related to a big charge for its antitrust litigation settlement with Discover Financial Services (DFS - Get Report).

For the three months ending Sept. 30, the Purchase, N.Y.-based card network posted a loss of $193.5 million, or $1.49 a share, vs. a profit of $314 million, or $2.32 a share in the year-ago quarter. MasterCard had announced last week that it would take a charge of $827.5 million ($515.5 million after taxes) to cover the settlement.

But excluding the charge, the firm posted net income of $322 million, or $2.47 a share. Analysts, who typically leave out special charges, expected the company would make $2.25 a share on $1.25 billion of revenue, according to Thomson Reuters.

MasterCard said net revenue rose 23.6% to $1.34 billion in the quarter. The combination of double-digit increases in gross dollar volume by 12.3% to $662 billion worldwide; the number of transactions processed by 13% to 5.4 billion and an 18% increase in cross-border volume contributed to revenue in the quarter, MasterCard said. MasterCard said that purchase volume in the quarter rose 13% to $97 billion.

"We are very pleased with our third quarter performance and our ability to deliver strong financial results given the declining global economy," CEO Robert Selander said in a statement. "At a time of unprecedented economic challenges, consumers, businesses, and governments around the world have continued to migrate toward various forms of electronic payments."

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