Mastercard revenue rises, but tax law dents earnings

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MasterCard President on implementing chip technology

MasterCard North America President Craig Vosburg on the rise in Americans' credit card debt and efforts to implement credit card chip technology in the U.S.

MasterCard (NYSE:MA) beat revenue expectations in its latest quarter, but its profit took a hit as it implemented U.S. tax law changes.

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Mastercard's fourth-quarter revenue rose 20% from the year before to $3.31 billion, more than the $3.26 billion analysts polled by Thomson Reuters expected.

Mastercard's profit dropped to $227 million, or 21 cents a share, from $933 million, or 86 cents a share, the year before. But excluding one-time items including impacts of the new U.S. tax law, it earned $1.14 a share, up from 86 cents a share the year before. Analysts expected adjusted earnings of $1.12 a share.

The company had about 2.43 billion Mastercard and Maestro-branded cardholders at year-end, and the value of transactions processed on its network rose 13% in the fourth quarter to $1.42 trillion.

Earlier Thursday, the company announced it landed Cabela's lucrative credit-card business following the sale of the sporting-goods company to Bass Pro.

The Purchase, N.Y., company continues to benefit from more cardholders using cards outside of the country they are issued in. "Cross-border" volume fees associated with those transactions and fees for Mastercard's networks in foreign markets both increased 17% from a year before.

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The company's fourth-quarter operating expenses increased 28%, mainly due to costs related to its acquisition of Vocalink and investments in strategic initiatives.

 Shares in Mastercard are up more than 60% over the past year as consumer card-based spending in the U.S. and abroad continues to rise. Shares in rival Visa are up more than 50%.