MasterCard Plunges on 18% Fall in Earnings

123jump.com Staff
01 May, 2009
New York City

MasterCard dropped as much as 10% after it reported first quarter sales declined 2.2% to $1.2 billion and net income declined 18%. The gross dollar volume and transactions declined in the U.S. and rose at a curtailed rate in Europe.

[R]10:30AM New York – MasterCard plunges after it reported18% decline in earnings.[/R]

MasterCard Incorporated ((MA)) plunged as much as 10% before recovering to a loss of $12.54 to $170.91 after it reported 18% fall in earnings.

The payment processor network operator reported first quarter sales declined 2.2% to $1.2 billion and net income of $367 million or $2.80 a share compared to $446 million or $3.37 a share.

The gross dollar volume in the quarter increased 0.3% to $550 billion and worldwide purchase volume increased 0.3% to $411 billion on local currency. The number of processed transactions increased 5.8% to 5.1 billion from a year ago.

Operating margin increased 5 percentage points from a year ago to 48.6% and effective tax rate declined to 33.2% from 35.1%.

Outstanding shares declined to 129.975 million from 131.764 million a year ago and the company reported cash and cash equivalent of $1.67 billion at the end of the quarter.

Net cash generated through operating activities was $416 million and free cash flow in the quarter was $173 million.

The weakening economy and a fall in the U.S. consumer spending is reflected in sharply lower gross dollar volume of transactions and the amount charged through the network. European transaction and volume charges are still growing but at a significantly slower growth rates.

Gross dollar volume of transactions in the U.S. declined 8% to $238 billion and increased 3.9% in Europe on a constant currency basis. In the same quarter a year ago gross dollar volumes in the U.S. increased 9% and in Europe had surged 30.3%.

In the U.S., credit and charge transactions declined 17.2% to $128 billion and debit charges rose 5.6% to $110 billion. For credit, charge and debit programs total transactions declined 7.1% to 3.3 billion.

MasterCard ((MA)) stock in the last one year traded as high as $320 and $113 and has increased nearly 30% prior to the fall today.