Visa's Fiscal 1Q Net Income Jumps 25 Pct

FOSTER CITY (CBS / AP) -- Shoppers hit stores for the holidays in the final months of 2012 and it seems many of them were armed with credit and debit cards using the Visa network.

The payments processing company said Wednesday that its profit jumped 25 percent in the last three months of 2012, as consumers used their credit cards and debit cards more often.

Visa's revenue from data processing, international transactions and service all rose from a year earlier in the October-December quarter, when consumers ramp up spending for the holidays.

All told, transactions processed over the Visa network totaled $14.2 billion during the quarter, an increase of 4 percent from a year earlier. While U.S. debit transactions fell 4 percent, debit and credit card transactions overseas jumped 21 percent.

Visa, which is based in Foster City, makes money by processing card transactions. Its results provide insight into how consumers are spending.

CEO Charles Scharf, hosting his first conference call with Wall Street analysts since taking over for former CEO Joseph Saunders on Nov. 1, laid out several strategic priorities for the company. Those include extending Visa's reach into the electronic payments market, as well as pressing for more growth overseas, particularly emerging markets.

"I am more bullish today about the opportunities that we have than the day I joined," Scharf said.

Visa and rival MasterCard Inc. are facing increased competition from alternative payment processing services, such as PayPal, which have begun making inroads beyond online storefronts to brick-and-mortar retailers.

Visa is hoping to expand its reach into the payments processing business with new products, such as an electronic wallet dubbed "V.me."

Scharf noted that the electronic wallet was being used at 31 merchant sites as of the end of 2012, and said the company has added another 122 merchants through Tuesday.

Among issuers signed up to use the electronic wallet so far are 12 of the top 25 U.S. banks, including Bank of America, and 51 U.S. regional banks, he said.

For the three months ended Dec. 31, Visa reported net income of $1.3 billion, or $1.93 per share. That compares with net income of $1.03 billion, or $1.49 per share, a year earlier.

These company's latest results included a tax benefit representing 11 cents per share.

Revenue rose nearly 12 percent to $2.85 billion.

Analysts polled by FactSet had forecast earnings of $1.79 per share on revenue of $2.82 billion.

During the analyst conference call, Chief Financial Officer Byron Pollitt said that revenue growth was broad-based during the quarter, noting Visa continues to see strong credit and debit growth in the U.S. and internationally, as well as a return to positive growth in the company's global debit card business.

Revenue from data processing rose 17 percent to $1.1 billion, while international transactions revenue grew 8 percent to $805 million. Service revenue jumped 13 percent to $1.3 billion.

In November, consumers increased their borrowing by $16 billion from September to a seasonally adjusted record of $2.77 trillion. Americans took on more debt to buy cars and to attend school but remained cautious in their credit card use. The Federal Reserve is scheduled to report figures for December on Thursday.

Some economists are concerned that consumer spending could slow this year as a result of higher Social Security taxes. Most paychecks have been reduced because Congress and the White House allowed a two-year reduction in Social Security payroll taxes to lapse at the end of December.

Visa noted that U.S. payment volume grew 5 percent through Jan. 28, compared with 3 percent in the October-December period.

Meanwhile, Visa said it is expanding a program to buy back its stock.

The company spent $1.3 billion to buy back 9 million shares in the quarter.

As of Dec. 31, its share buyback authorization stood at $1.1 billion, to which it added $1.75 billion for a total of just under $3 billion.

Shares fell $1.82 to $159 in after-hours trading. The stock ended regular trading up $1.29 at $160.82. Shares are up about 6 percent this year.

Last week, MasterCard reported that its net income and revenue rebounded strongly in the October-December quarter as its overseas business continued to expand. The company is expanding most quickly in Latin America and the region that includes Asia, the Middle East and Africa.

Outside the United States, the volume of cash moved in 2012 increased 23.5 percent on a U.S. dollar basis. That compares with growth of 9.7 percent inside the U.S., where MasterCard has been trying to gain a bigger share of the credit card market.

MasterCard shares ended regular trading up $2.86 at $523.55. Shares fell $1.16 to $522.39 in extended trading on Wednesday.

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