MasterCard Declines as Revenue Misses Estimates: New York Mover

MasterCard Inc., the second-biggest U.S. payments network, fell the most since August after first-quarter revenue missed analysts’ estimates.

MasterCard declined as much as 3.1 percent in New York trading and slid $15.12, or 2.7 percent, to $537.81 at 11 a.m. Revenue increased 8.4 percent to $1.91 billion from a year earlier, the Purchase, New York-based firm said today in a statement. That compares with the $1.93 billion estimate of 29 analysts surveyed by Bloomberg.

“Revenues were short of our below-consensus estimate, as volume and processed transaction growth slowed more than expected,” Tien-Tsin Huang, an analyst with JPMorgan Chase & Co., said in a note to clients today. “We’d like to see consensus estimates move lower.”

MasterCard Chief Executive Officer Ajay Banga is targeting markets in Latin America, Asia and Africa to counter sluggish consumer spending in the U.S. and Europe. Purchases by U.S. consumers slowed in March after the strongest gain in five months, showing the biggest part of the country’s economy lost momentum as the first quarter drew to a close.

First-quarter profit increased 12 percent to $766 million, or $6.23 a share, from $682 million, or $5.36, a year earlier, the firm said, topping the $6.17 average estimate of 33 analysts surveyed by Bloomberg.

“Our performance was completely in line with our expectations,” Chief Financial Officer Martina Hund-Mejean said in a phone interview. “We have not changed our outlook at all.”

Revenue Climbs

MasterCard climbed 13 percent this year through yesterday, outpacing the 5.1 percent gain for the 70-company Standard & Poor’s 500 Information Technology Index.

Worldwide spending on MasterCard- and Maestro-branded cards rose 10 percent to $690 billion in the quarter, adjusted for currency fluctuations, the company said. Spending by consumers outside their home countries surged 16 percent. Processed transactions advanced 12 percent to 8.7 billion.

While U.S. consumer spending had a “rebound” in January compared with the prior year, February had “a very weak performance,” Hund-Mejean said. Consumers spent less after being hit with higher payroll taxes that took effect in January, she said.

MasterCard’s operating expenses increased 5.4 percent to $799 million, mainly because of higher personnel expenses, the firm said. The firm is likely to boost total 2013 costs by just below 8 percent as it adds staff, Hund-Mejean said.

Visa Inc., the world’s biggest payments network, is scheduled to report fiscal second-quarter results later today. The Foster City, California-based company may say net income fell 7 percent to $1.2 billion, according to the average estimate of 21 analysts in a Bloomberg survey.

American Express Co., the third-biggest U.S. network, and No. 4 Discover Financial Services, both said last month that first-quarter profits rose as customer card spending increased.

Before it's here, it's on the Bloomberg Terminal.