Visa Advances as Net Income Beats Estimates: San Francisco Mover

Visa Inc. (V) gained the most since May after reporting fiscal third-quarter profit that beat analysts’ estimates as consumers stepped up use of credit and debit cards.

Visa rose 4.6 percent to $195.33 at 10 a.m. in New York, the second-best performer on the Standard & Poor’s 500 Information Technology Index. The shares gained 29 percent this year, outpacing the 9.4 percent advance of the 70-company index.

Net income for the three months ended June 30 was $1.23 billion, or $1.88 a share, compared with a loss of $1.84 billion, or $2.74, a year earlier that included a litigation expense, the Foster City, California-based firm said yesterday in a statement. The average estimate of 33 analysts surveyed by Bloomberg was for earnings of $1.80 a share. Profit excluding special items from the third quarter of 2012 climbed 16 percent.

Chief Executive Officer Charlie Scharf is seeking to bolster Visa’s business outside the U.S., where it gets more than half its revenue, as consumers worldwide continue to migrate from cash and checks to electronic payments. The company has returned more than $15 billion to shareholders since 2008.

“The opportunity to move transactions from cash to electronic means is still huge,” Scharf, 48, said yesterday in a conference call with analysts. “This is true in both the developed and the developing parts of the world.”

Share Repurchases

The company repurchased $981 million of its stock during the quarter at an average of $176.75 a share and may buy back an additional $1.5 billion through next July, according to the statement.

Third-quarter operating revenue climbed 17 percent to $3 billion, beating the $2.89 billion average estimate of analysts surveyed by Bloomberg. Revenue will increase about 13 percent this fiscal year, according to the statement. Earnings per share will rise by more than 20 percent, the company said, after an earlier forecast of “around” 20 percent.

Worldwide spending on Visa cards climbed 13 percent to $1.09 trillion, adjusted for currency fluctuations, according to the statement. Processed transactions rose 14 percent to 15 billion. Cross-border purchases, or spending by cardholders outside their home countries, advanced 11 percent.

In the U.S., debit-card purchases advanced 12 percent to $300 billion, and credit-card spending increased 10 percent to $270 billion, according to the statement.

Legal Settlement

Visa and No. 2 network MasterCard Inc. (MA) agreed last year to a $7.25 billion settlement over the fees charged to merchants when consumers pay with credit cards. Visa sued Wal-Mart Stores Inc. last month to stop the biggest U.S. retailer from filing a lawsuit that would prolong the eight-year legal battle the settlement seeks to end.

American Express Co. (AXP), the New York-based card issuer that also runs the third-largest U.S. bank-card network, said July 18 that second-quarter profit rose 4.9 percent to $1.41 billion as customer purchases increased. Riverwoods, Illinois-based Discover Financial Services (DFS), the No. 4 network, said yesterday that quarterly net income climbed 15 percent to $602 million. MasterCard is set to report results July 31.

To contact the reporter on this story: Dakin Campbell in New York at dcampbell27@bloomberg.net

To contact the editors responsible for this story: David Scheer at dscheer@bloomberg.net; Christine Harper at charper@bloomberg.net

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