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Visa Falls Despite Revenue Gains

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Visa Falls Despite Revenue Gains

Shares of Visa (NYSE:V) moved sharply to the downside in the extended hours session following a drop in profits during company’s fourth quarter.

The company reported earnings of $1.85 per share, or $1.2 billion, an increase of 20% and 15% over the same period’s adjusted results in 2012. Moreover, the company announced an additional $5.0 billion in a new share repurchase program alongside a 21% increase in its quarterly dividend. Visa generated full-year net income of $5 billion, or $7.59 per share, up 18% and 23%, respectively, over its adjusted full-year 2012 results. A number of Visa’s business segments saw nice uptick in revenues. Total operating revenues rose by 13%, driven by strong gains in its service (10%), data processing (17%), and international transactions revenues (12%), the three largest revenue segments.

Revenue at Visa in the fourth quarter came in at $2.9 billion, up 8% over the fourth quarter of last year. While its business segments saw revenue improvements greater than 10%, revenue was only up 8% due to an increase in client incentives. This line item acts as a contra-revenue item and grew from $563 million to $680 million, a gain of more than 20%.

Shares of the company have moved swiftly to the upside over the last year. Year to date shares of the company are higher by more than 30 percent to $200 per share. For the fiscal year 2013, Visa repurchased a total of 33 million shares at an average price of $161.94 per share. Great trading on management’s part considering shares are well above their average acquisition price. Going forward, over the short term shares may experience turbulence. Analysts updates and market headlines seem likely to cause volatility within the entire credit space. At the time of this writing shares were down by $5 per share to $198.50.

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