MasterCard Says Revenue to Miss 2009 Target

MasterCard posted better-than-expected quarterly earnings on Friday but said revenue growth this year will fall short of its targets, sending its shares down 6 percent in morning trading.

The world's second-largest credit card network said lower expenses and increased fees helped first-quarter results. Net income fell 18 percent to $367 million, or $2.80 per share, from $447 million, or $3.37 per share, a year earlier. But the results beat Wall Street expectations.

Analysts, on average, forecast earnings of $2.62 per share, according to Reuters Estimates.

Net revenue fell 2.2 percent to $1.2 billion, as the strong dollar impacted revenue generated overseas. Operating expenses decreased 10.8 percent as MasterCard trimmed advertising and marketing spending, tightened travel expenses and slashed consulting fees.

The company's bigger rival, Visa, beat Wall Street earnings expectations earlier this week, helped by higher fees, lower expenses and increased use of its debit cards by consumers.

"People were generally encouraged with Visa (and) that added some momentum to MasterCard," said Ken Crawford, senior portfolio manager at Argent Capital Management.

MasterCard is partially insulated from the credit crisis because it processes transactions rather than lends funds.

But the company has seen a slowdown in the growth of revenue and transaction volumes as battered consumers used their credit cards less.

"Visa has more debit (business), and most people think that debit is less discretionary and is a more stable method for payment, while credit is for things you may or may not buy," Crawford said.

MasterCard said net revenue growth this year will fall short of its long-term goal of 12 percent to 15 percent. It forecast 2009 operating expenses would be flat to slightly lower compared with last year, including the impact of all severance charges.

MasterCard Chief Executive Robert Selander said in a conference call with analysts, "We don't believe there's any reason to assume the economic slowdown across the world will improve for the balance of this year."

The firm's first-quarter gross dollar volume inched up 0.3 percent to $550 billion on a local currency basis, but the growth was slower than in recent quarters.

Purchase volume grew only 0.3 percent, hit by lower use of credit cards in the United States and a slowdown in Europe, Canada, Asia and Latin America.

MasterCard shares were down 6 percent at $172.24 in morning trading on the New York Stock Exchange, one day after touching their highest level in seven months. The shares are up 25 percent this year.

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