Visa Second Quarter Earnings Report

[Travel Guru]

Visa profits climbed 28%, as stated in the Visa second quarter earnings report. Travelers around the world rely on Visa credit cards, and their acceptance by virtually all merchants makes them extremely useful.

Details on the Visa earnings in the second quarter of 2008 are as follows:

Visa Inc, the recently listed credit card processing reported second quarter earnings rose 28% to $314 million on revenue of $1.45 billion compared to $1.19 billion or $246 million. Earnings per share were 39 cents per class A share. Visa fell $3 in the after-hours trading to $72.63 cents and in the regular hours traded as high as $77.29 but settled 53 cents higher at $75.63. On an adjusted basis net income for the quarter considering normalized tax rate and excluding litigation, restructuring and purchase amortization, was $401 million, or $0.52 per diluted class A common share. Adjusted diluted class A common shares outstanding were 779 million. For the six months net income rose to $738 million or 93 cents per diluted class A common share and on an adjusted basis diluted earnings per share increased to $1.08. Total cards with the Visa logos jumped 16% to 1.6 billion in the quarter and payment volume rose 19% to $681 billion. Total volume including cash increased 21% to $1.1 trillion. Total processed transaction increased 15% to 8.8 billion from a year ago. Visa priced its offering at $44 per share on March 18.

At the end of 2007, Visa processed charges for $3.23 trillion for 44 billion transactions from 1.4 billion cards. During the same period, MasterCard processed $1.9 trillion for 23.4 billion transactions from 817 million cards. American Express processed $562 billion for 4.5 billion transactions from 78 million cards. Discover has issued 57 million cards and Diners Club network has 7 million cards under its logo. Consumers in the U.S. are using charge and debit cards to pay for many purchases including groceries, pharmaceuticals and household items. As income in Asian countries rise more consumers are using Visa and MasterCard to pay for personal expenses.

Despite the huge jump in earnings, stock traders gave the Visa credit card company a huge thumbs down. Despite posting a 27.6% rise in second-quarter earnings, investors kicked the San Francisco-based credit card company down 6.4%, or $4.80, to $70.83, in after-hours trading after it issued a three-year outlook that some might deem conservative for a company considered to be one of the best positioned in the card business: annual sales growth of 11.0% to 15.0%, annual adjusted operating margin in the low 40.0% range, annual adjusted earnings-per-share growth of 20.0% or greater, and annual free cash flow above $1 billion.

What is the financial company supposed to do to satisfy Wall Street? Perhaps earn 90% ore in earnings? Perhaps.