reported on-target earnings today, showing a 13% gain, but shares of the financial and travel services behemoth still dropped.
The stock dropped 5 1/4, or 4%, to close at 143 3/8. Shares of American Express, however, were under pressure even before its financial results were released early this afternoon. Michael Freudenstein, specialty finance company analyst at
, said the fall had more to do with "a basic selloff in financials after the euphoria of Friday" than anything else.
For the third quarter ended Sept. 30, net income rose to $648 million, or $1.42 a diluted share, from $574 million, or $1.25 a share, a year earlier. Net revenues rose to $4.88 billion from $4.43 billion in the 1998 third quarter. The numbers were in line with the
First Call/Thomson Financial
A spokesperson at American Express attributed the healthy earnings numbers to "the expansion of the three focuses of our business: growing internationally, expanding our financial services operation, and expanding our network."
that American Express' top-line drivers -- account growth, receivables growth and billed business -- were all better than expected. In fact, the company's reported $2.3 billion worth of loans in its receivables business was in line with its competitors
, and "one of the bigger numbers we've seen this quarter," he said.
Growth was healthy at the company's
Travel Related Services
American Express Financial Advisors
operations. Both businesses chalked up14% growth in net income, with the travel unit recording nearly a 12% increase in net revenues and the financial unit recording a 16.7% increase. The
American Express Bank/Travelers Cheque
business suffered a decline in net income, down 13% year on year to $38 million this quarter, but Freudenstein characterizes that segment as "under construction" and said that he only had "modest expectations" for it.
J.P. Morgan's Freudenstein has a positive outlook on the company. "The evolution of financial services will make the company's great brand name even more of a distinctive asset than it's been," he explained. . Freudenstein maintains a buy rating on the stock and has not been involved in any recent underwriting for the company.