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uncle_vito
March 28th 09, 03:54 PM
http://online.barrons.com/public/article/SB123820168239262493.html

RayLopez99
March 29th 09, 02:07 PM
On Mar 28, 11:54*am, "Uncle_vito" > wrote:
> http://online.barrons.com/public/article/SB123820168239262493.html

Subscription required. Pls post the entire article here.

RL

Ron Peterson
March 29th 09, 02:22 PM
On Mar 28, 10:54*am, "Uncle_vito" > wrote:
> http://online.barrons.com/public/article/SB123820168239262493.html

Look at the tangible book value before you buy.

--
Ron

uncle_vito
March 29th 09, 06:03 PM
FEATURE








The Pleasure of Plastic
By MICHAEL SANTOLI | MORE ARTICLES BY AUTHOR

Often misunderstood, the world's largest payments network could get a
powerful lift from the growing use of debit and credit cards.

IT IS UNCOMMON WHEN the chief executive of a company with a $50 billion
market value and a globally ubiquitous brand feels compelled to explain to
investors the rudiments of its business. Yet this is the position Joe
Saunders, CEO of Visa, sometimes finds himself in. The first slide of an
investor presentation given by the company last month states "What we are,"
which is the "largest payments-network company in the world." As for "what
we are not," that includes "credit-card issuer, lender, exposed to
consumer-credit risk."

Persistent misapprehensions about Visa's (ticker: V) business, a year after
the company completed the largest-ever initial stock offering in the U.S.,
have created an opportunity for investors seeking a financially stable
mega-cap growth stock as a core holding.

Visa brands debit and credit cards issued by banks, and earns fees on
payments that move over its proprietary network. As such, it stands in the
vanguard of a burgeoning secular trend: the use of plastic for everyday and
big-ticket transactions.

U.S. payments via debit card, in which the money is drawn directly from a
purchaser's bank account, grew at an 18% annual rate between 2002 and 2007,
according to McKinsey. Even though that pace is expected to slow to about 9%
through 2012, the public's increasing reliance on cards of both sorts could
provide a powerful lift to Visa's earnings and shares, which trade around
$55.50. Some fans think the stock could trade up to the $70s, even in a
difficult economy.

Visa has about 75% of the U.S. debit-card market, compared with 25% for
MasterCard International (MA), its principal global competitor. While the
rivalry between them is spirited, they jointly compete against a bigger foe:
cash and checks. In the U.S., cash is used in 57% of transactions, and most
countries are even more cash-centered.

Plastic's long-running encroachment on cash and check usage could create an
attractive tailwind for Visa and MasterCard for years to come. With pretax
profit margins exceeding 40%, steady top-line growth easily translates for
both into earnings-growth rates exceeding 15%.

Much excitement greeted the Visa IPO, which priced in March 2008 at $44 a
share. The stock immediately traded into the mid-$60s, where it fetched more
than 30 times forecast earnings, a rich multiple. By last May it had raced
into the high-$80s, before losing nearly half its value as the market for
almost everything consumer-tinged was hammered.

Visa has some sensitivity to consumer-spending activity, but even after the
Sept. 11, 2001, terrorist attacks, when the consumer largely froze, revenue
grew at a high-single-digit rate. In 2008's fourth quarter, when U.S.
consumers snapped their wallets shut, San Francisco-based Visa posted
double-digit top-line growth. A planned price increase will help boost
revenue this year, while lapping last year's results, hurt by high gasoline
prices, will lead to better comparisons.



Stuart Goldenberg for Barron's.

Visa trades at 20 times 2009 forecasts of $2.70 a share for the fiscal year
ending in September. The company posted a profit of $1.7 billion, or $2.25 a
share, in fiscal 2008, on total revenue of $6.26 billion. The stock's
multiple may appear rich relative to the Standard & Poor's 500, which trades
at less than 14 times future earnings. Yet Visa's profit, based on its
guidance and analysts' forecasts, will rise by almost 20%, a rare
distinction in a growth-starved market.

MasterCard is more modestly valued at 16 times calendar 2009 forecasts, and
is attractive as an investment as well. The valuation discount is due to
Visa's greater exposure to debit, and the continued overhang of some
merchant-pricing litigation involving MasterCard. Visa has cut a deal that
shifts this liability to the issuing banks.

Also, MasterCard has been public since 2006, and is further along than Visa
in transitioning to a profit-maximizing company from a member-bank-owned
cooperative.

The Bottom Line:

Visa went public a year ago at $44 a share, shot up to the $80s and now
trades at about $55. If the company meets or beats forecasts, as expected,
the shares could head for $70.

One potential model for Visa's shift is the path taken by futures exchanges
such as CME (CME), which have transitioned from ownership by their largest
customers to independence as trading networks, and have profited from volume
growth. They also enjoy pricing power, good free cash flow and defensible
margins. For Visa, margin expansion and conservative revenue expectations
could produce $5 to $6 of earnings per share in five years, some money
managers estimate.

Bill Sheedy, Visa's president for North America, notes the business "isn't
very capital intensive. The main costs are marketing the brand and running
the network."

Visa has the flexibility to modulate spending to protect or increase its
margins. That means it has room to meet or outdo current earnings forecasts,
and that its shares aren't as expensive as they appear. If the stock beats a
path back toward $70, as expected, it would reinforce Visa's emerging status
as a core blue-chip-like holding.



"RayLopez99" > wrote in message
...
On Mar 28, 11:54 am, "Uncle_vito" > wrote:
> http://online.barrons.com/public/article/SB123820168239262493.html

Subscription required. Pls post the entire article here.

RL

RayLopez99
March 29th 09, 08:47 PM
On Mar 29, 1:03*pm, "Uncle_vito" > wrote:

[Visa stuff]

Thanks for that blurb.

Below is what Morningstar says (bearish view) and says it's worth $70
now, so not bad.

Good luck, I will pass.

RL

Bears Say

Visa is a constant target of regulators throughout the world, and
attacks on the firm's business model are unlikely to stop.


The exclusion of Visa Europe from the IPO undermines the firm's
ability to negotiate agreements with large global bank clients such as
HSBC HBC.


American Express has been stealing share from Visa in its biggest
market, the United States. We expect this to continue now that Amex is
allowed to issue its cards through banks that were previously
exclusive to MasterCard and Visa.


If the interchange fees charged to merchants decrease substantially,
banks that issue Visa will probably put even greater pressure on the
firm to reduce the amount of processing fees and assessments it
charges, leading to lower revenue.


In many of its international markets, Visa benefits from only cross-
border transactions, while intracountry transactions are processed
through rival processing networks. As a result, Visa doesn't benefit
from the bulk of the growth in foreign markets.

BuffetHater
March 30th 09, 01:01 AM
Fat vito paid 70 for the stock, borrowed the money from his adoptive
father.

uncle_vito
March 30th 09, 05:14 AM
Several years ago I went to Costa Rica. Several expat Canadians retiring
there. They moved there to escape the high taxes in Canada. Health care
was free there, but in Costa Rica it is so cheap you can pay your hospital
bill in cash with no problem.

Vito


"BuffetHater" > wrote in message
...
> Fat vito paid 70 for the stock, borrowed the money from his adoptive
> father.
>

uncle_vito
March 30th 09, 05:17 AM
Thanks for your information. I do not see reasonable opinions on this stock
like you sent me.

I will see what happens. I do not have my life savings in V.

Vito


"RayLopez99" > wrote in message
...
On Mar 29, 1:03 pm, "Uncle_vito" > wrote:

[Visa stuff]

Thanks for that blurb.

Below is what Morningstar says (bearish view) and says it's worth $70
now, so not bad.

Good luck, I will pass.

RL

Bears Say

Visa is a constant target of regulators throughout the world, and
attacks on the firm's business model are unlikely to stop.


The exclusion of Visa Europe from the IPO undermines the firm's
ability to negotiate agreements with large global bank clients such as
HSBC HBC.


American Express has been stealing share from Visa in its biggest
market, the United States. We expect this to continue now that Amex is
allowed to issue its cards through banks that were previously
exclusive to MasterCard and Visa.


If the interchange fees charged to merchants decrease substantially,
banks that issue Visa will probably put even greater pressure on the
firm to reduce the amount of processing fees and assessments it
charges, leading to lower revenue.


In many of its international markets, Visa benefits from only cross-
border transactions, while intracountry transactions are processed
through rival processing networks. As a result, Visa doesn't benefit
from the bulk of the growth in foreign markets.