PURCHASE, N.Y. (
shares tumbled in premarket trading after the electronic payments firm's fourth-quarter results didn't live up to Wall Street expectations.
For the December-ending quarter, MasterCard reported earnings of $294.4 million, or $2.24 a share, up more than 20% from its year-ago profit of $239.4 million, or $1.83 a share.
Excluding a charge of 19 cents a share related to severance expenses, the Purchase, N.Y.-based company posted an adjusted profit of $2.43 a share for the most recent three months ended Dec. 31.
That performance was short of the average estimate of analysts polled by
for earnings of $2.46 a share in the latest quarter.
The stock was down nearly 6% to $233.12 just ahead of the opening bell. That was a reversal of direction from late yesterday when the shares rose slightly after
, MasterCard's main rival,
with its fourth-quarter numbers.
MasterCard said revenue for the fourth quarter rose 6% from year-ago levels to $1.3 billion, in line with the consensus estimate. The company noted that currency fluctuations (driven by the movement of the euro and the Brazilian real relative to the U.S. dollar) contributed 3.8 percentage points of the increase in net revenue for the quarter.
Other contributors to the year-over-year revenue growth included price increases of approximately 5 percentage points and a 3.9% increase in cross-border volume. MasterCard said, however, that these positives were partially offset by an increase in rebates and incentives as part of new and renewed customer agreements with its financial institution customers.
Operating expenses rose nearly 10% to $830 million during the fourth quarter , fueled by a 25% increase in advertising and marketing expenses versus the year-ago period, as well as currency fluctuations.
MasterCard's gross dollar volume rose 5.3% on a local currency basis, to $674 billion. Purchase volume worldwide rose 5.7% $510 billion.
Continuing the trend over the past two years, MasterCard continued to make headway in growing its debit card business, albeit off still low levels, and its international credit card business, while U.S. credit card volume declined.
Outside the U.S., purchase volume on MasterCard debit cards rose 30% to $40 billion. Within the U.S., debit volume rose 10% to $85 billion.
Purchase volume on MasterCard credit and charge cards outside the U.S. rose 9% to $263 billion. Still credit card purchase volume within the U.S. dropped 8% to $123 billion.
MasterCard said the number of transactions processed in the quarter rose 6.7% to 5.9 billion. MasterCard had 966 million cards in forced at Dec. 31.
"In 2009 we took important steps to maintain MasterCard's bottom-line growth, and as a result delivered another quarter and year of solid financial results," MasterCard's CEO Robert W. Selander said in a statement. "We remained focused on the needs of our customers, and continued to add value amid a challenging economic environment.
Selander added that in the final three months of 2009, the company saw "encouraging signs" such as increased cross-border volumes and the continuing growth of processed transactions.
--Written by Laurie Kulikowski in New York.