MasterCard Profit Declines 21%

MasterCard's profit dropped 21% in the fourth quarter, but beat Wall Street's expectations.
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MasterCard's

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profit dropped 21% in the fourth quarter, but beat Wall Street's expectations amid the economic slump.

The Purchase, N.Y.-based company made $239 million, or $1.84 a share, in the final three months of the year, vs. $304 million, or $2.26 a share in the year-earlier period. Still, MasterCard widely beat the average analyst estimate by 24 cents, according to Thomson Reuters.

Revenue rose 14.2% to $1.2 billion in the quarter, fueled by "pricing changes" and a 6% increase in the number of transactions processed during the quarter to 5.5 billion. MasterCard's gross dollar volume rose 3.4% to $605 billion.

For all of last year, MasterCard posted a loss of $254 million, or $1.95 a share, vs. a profit of $1.08 billion, or $8 a share in 2007. The company had several special pre-tax items that contributed to the loss, including charges related to settlements of lawsuits with two rivals who had charged that MasterCard had conspired to keep them out of the bank-issued credit card market. MasterCard said it would take a $1.65 billion charge related to the antitrust litigation settlement with

American Express

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and an $827.5 million net charge related to the

Discover Financial Services

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litigation settlement.

Included in the fourth-quarter results was a $6 million charge related to a litigation settlement regarding consumer protection in California, the company said.

Excluding the charges, MasterCard would have made $1.2 billion, or $9.45 a share.

"Despite the significant economic turbulence around the world, we were able to achieve excellent fourth-quarter operating results while maintaining a healthy balance sheet, which is a strength in this environment," MasterCard's president and CEO Robert Selander said in a statement.

"The economic environment remains challenging, with businesses, governments and consumers around the world rethinking how finances are managed. One thing is certain in this new reality of increased financial management control -- the value and importance of electronic payments has never been greater," Selander said.

Visa

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on Wednesday posted a 35% rise in profit for the final three months of 2008, to $574 million, or 74 cents a share.