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Visa Profits Rise, Despite Economy

Visa shares were surging in after-hours trading Wednesday, as the credit card processor's quarterly profit spiked 35%, despite the sour economy.


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shares were surging in after-hours trading Wednesday, as the credit card processor's quarterly profit spiked 35%, despite the sour economy.

The San Francisco-based company made $574 million, or 74 cents a share, in the final three months of the year -- its fiscal first quarter -- compared to a pro forma profit of $424 million in the year-earlier period, before it went public. On an adjusted basis, the company made $599 million, or 78 cents a share, in the quarter, it said.

Analysts, on average, predicted the company would make 66 cents a share, according to Thomson Reuters.

Net operating revenue in the fiscal first quarter of 2009 was $1.7 billion, an increase of 17% over the prior year, driven by strong contributions across all revenue categories, Visa said.

The company said payments volume and processed transactions remained solid, particularly in regions outside of the U.S. such as Asia Pacific, central Europe, the Middle East and Africa, Latin America and the Caribbean.

"We are very pleased with our fiscal first-quarter earnings results and our ability to deliver strong operating performance," Chairman and CEO Joseph Saunders said in a press release. "Despite the increasingly challenging economy, processed transaction growth, the strength of debit, and the global diversity of our business continue to highlight the resilience of our business model."

But Saunders cautioned that the company sees tougher economic conditions in the second half of the year than it originally expected, which will result in revenue growth "likely in the low single digits."


We remain steadfast in our ability to meet our 2009

earnings per share guidance," Saunders said. "Rationalizing our expense structure and further leveraging operational efficiencies within the organization remain priorities. These directives, coupled with providing innovative products and services along with the global expansion of our business, will further support our long-term success."

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Visa reiterated that is used $1.5 billion of the net proceeds from its March 2008 initial public offering for the redemption of approximately 35 million Class C shares of common stock. The company paid an additional $1.138 billion of its IPO proceeds to fund the redemption of all class C (series II) common stock. The redemption price was $1.146 billion, before adjusting for dividends paid and related interest.

The company in December also deposited $1.1 billion of reserves into an escrow account related to a settlement with

Discover Financial Services

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. Discover, like

American Express

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, sued Visa and


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for monopolizing the bank-issued credit card space.

Shares of Visa rose roughly 8% to $52.90 in after-hours trading.

MasterCard reports its fourth-quarter earnings on Thursday morning.