Visa Profit Up 31% As Consumers Use Plastic Over Cash and Gov't Steps Up The Pressure On Toyota; LaHood Reverses From 'Stop Driving'

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City of Industry, CA --(www.USEquityNews.com)-- 02/05/2010 - Financial News industry alert provided by U.S. Equity News. The largest credit-card network said profit in its first quarter ending Dec. 31 climbed 31% to $1.02 a share, beating views by 11 cents. Revenue rose 13% to $1.96 bil, just above forecasts.


"This was clearly a good report driven by higher debit card usage, signaling that ailing consumers, while not fully healed, are feeling a little better," said Robert Dodd, an analyst at Morgan Keegan.

Visa (V) shares rose nearly 3% in after-hours trading after dipping slightly ahead of the report. Chief rival MasterCard (MA), which reports Thursday, edged up late, recouping some of its regular-session loss of 2%.

Processed transactions rose 12% to 10.9 billion from a year ago as the number of Visa-branded cards increased 5% to 1.8 billion. Total payments volume grew 9% to $769 billion.

U.S. payment volume, a measure of total spending on Visa's network, increased 7% to $438 billion, as a 15% gain in debit cards offset a 1.1% decline in credit cards. [Read the full article]

"Our ... people will hold Toyota's (TM) feet to the fire to make sure they are going to do everything they said they were going to do to make the vehicles safe," Transportation Secretary Ray LaHood said at an appearance in Washington.

He said he would take the unusual step of calling Toyota President Akio Toyoda to emphasize how seriously the administration is taking investigations into reports of uncontrolled acceleration in Toyota vehicles.

A shim, top, that will be used to fix springs in gas pedal systems of recalled Toyota vehicles is shown Wednesday at Andy Mohr Toyota in Avon, Ind.... View Enlarged Image

LaHood touched off a sharp sell-off in Toyota shares and a flood of calls to U.S. dealerships from panicked consumers when he appeared to tell Americans to stop driving Toyotas under recall. [Read the full article]

It's taken a while to prove its point and cope with the debt it took on. The recession and lending crisis got in the way. Shares that had been at 25 in early 2006 bottomed out below 6 in late 2008.

The Pennsylvania company had bought two firms: India-based Matrix in 2006 and, in 2007, the generics unit of German-based Merck KgaA, which is not part of U.S.-based Merck (MRK). The buys made Mylan the No. 3 generic-drug maker, behind Israel-based Teva Pharmaceutical (TEVA) and the Sandoz division of Swiss-based Novartis (NVS).

Mylan paid $6.8 billion in cash for German Merck's generic unit, financing the deal with debt. Those were the days when it was easy to borrow. Mylan's loan carried a floating rate.

It had paid $736 million in cash for 72% of Matrix in 2006 and bought the rest of that company for $133 million last year.

The Street worried about interest costs going through the roof, says Marc Goodman, an analyst at UBS. [Read the full article]

Proposals by a coalition led by Fortress Investment Group (FIG) address "underwater" loans with high balances relative to fallen home values .

Central to plans pitched this week to House Financial Services Committee Chairman Barney Frank is a controversial way to deal with secondary loans. These home equity loans are a major hurdle in modifications, being attached to more than half the loans in private mortgage bonds.

The Mortgage Investors Coalition represents holders of $100 billion in mortgage bonds. It is prepared to consider principal reduction with shared losses vs. demanding full write-downs on secondary liens, said group attorney Micah Green of Washington law firm Patton Boggs.

It could help break the impasse keeping big-bank servicers from forgiving principal, he says. Under the plan, investors would forgive principal to 96.5% of homes' value, clearing a path for borrowers to refinance into a federally backed mortgage. [Read the full article]

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