MasterCard Misses Street Views in 4Q

By Industries FOXBusiness

MasterCard credit cards are seen in this illustrative photograph taken in London December 8, 2010. Hackers have crashed the website of credit card firm MasterCard in apparent retaliation for its blocking of donations to the Wikileaks website it was ... reported on Wednesday. REUTERS/Jonathan Bainbridge (BRITAIN - Tags: BUSINESS IMAGES OF THE DAY) (Reuters)

MasterCard’s (MA) fourth-quarter earnings rose 3% but missed Wall Street expectations, even as the credit card company saw a continued increase in cardholder spending.

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The company said its profit checked in at $623 million, or 52 cents a share, compared to $605 million, or 49 cents a share, in the year-ago period. Revenue rose 12% to $2.13 billion.

MasterCard noted that both periods reflect a 10-for-1 stock split that was announced late last year.

MasterCard would have earned 57 cents a share without a $61 million litigation charge tied to a battle with merchants over transaction fees. Along with Visa (V), the company agreed to a $5.7 billion settlement over allegations that the two firms colluded to set so-called swipe fees at high levels.

The results missed estimates for both the top and bottom lines. Analysts were looking for per-share earnings of 60 cents and slightly better revenue of $2.14 billion.

Shares fell off 7% to $74.20 early Friday morning.

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Fourth-quarter revenue was lifted by 13% growth in processed transactions. The Purchase, N.Y.-based company also said its cardholders spent $1.1 trillion during the period, up 14% on a local-currency basis.

But MasterCard, which operates the second-largest payment network behind Visa (V), saw an increase in rebates and incentives that are paid to merchants and banks for agreement renewals. Those payments were up 23% at $925 million in the fourth quarter, weighing on the bottom line.

On Thursday, Visa reported 8.8% profit growth amid an 11% increase in payments volume.