Recession? Where?

[italiandragon]

I still see americans buying everything, their kids getting fatter , their cars getting bigger......their stocks getting more money.....


http://www.bloomberg.com/apps/news?pid=20601087&sid=a0Fox_jk2qzk&refer=home



Visa Rises After Record $17.9 Billion U.S. Offering (Update1)

By Elizabeth Hester

March 19 (Bloomberg) -- Visa Inc., the world's biggest credit-card network, soared as much as 57 percent in its first day after raising $17.9 billion in a record U.S. initial public offering.

Visa advanced $15.87 to $59.87 at 11:25 a.m. in New York Stock Exchange composite trading. Underwriters sold 406 million Class A shares of Visa for $44 each, according to a company statement late yesterday. That's $2 more than the highest price predicted by San Francisco-based Visa in its prospectus.

Visa and MasterCard Inc., the second-biggest card network, are benefiting as consumers turn away from cash and checks in favor of credit and debit cards. MasterCard has returned about 450 percent since its IPO in 2006. Unlike American Express Co. and Discover Financial Services, which make credit-card loans to consumers, Visa and MasterCard just process transactions.

``This one stock reminds me of the dot-com days; this is a very warm welcome,'' said Michael Kon, senior analyst at Chicago-based Morningstar Inc. ``Investors like the fact that there is no credit risk.''

The IPO eclipses AT&T Wireless Group's $10.6 billion offering in 2000, and will rank as the world's second-biggest IPO if underwriters use their option to sell 40.6 million more shares. The largest was the $22 billion debut by Industrial & Commercial Bank of China Ltd. in 2006.

Visa's Class A shares trade under the ticker ``V.''

Preference for Plastic

Cards will be used for 55 percent of all U.S. transactions by 2011, rising from 40 percent in 2005, according to the Nilson Report, an industry newsletter based in Carpinteria, California.

MasterCard has doubled in the past year, compared with a 21 percent drop at American Express and Discover's 39 percent decline since its spinoff last year from Morgan Stanley.

Led by Chief Executive Officer Joseph Saunders, 62, Visa's initial public offering completes the transformation of the firm and MasterCard from not-for-profit associations owned by banks to independent companies that serve banks as customers.

The six largest bank owners of Visa, which hold Class B shares, may have collected $3.2 billion by selling some of their stock, according to data compiled by Bloomberg. JPMorgan Chase & Co., Visa's largest bank holder, made approximately $1.26 billion. The bank's remaining Class B shares are worth about $2.84 billion. It has set aside $700 million to cover costs related to Visa litigation.

Credit Losses

Bank of America Corp. made about $625.7 million in the sale and holds an equity stake worth $1.41 billion. Bank of America is Visa's second-largest bank owner.

The world's biggest financial firms have absorbed $195 billion in writedowns and credit losses since the beginning of 2007, including $37.1 billion by Visa's top holders, according to data compiled by Bloomberg.

Visa agreed on Nov. 7 to settle a 2004 antitrust suit brought by New York-based American Express for $2.25 billion, removing an obstacle to the share sale. Some proceeds from the offering will be used to settle lawsuits including the one with American Express, Visa said in its filing. The rest will be used to buy stock from member companies and to run the business.

American Express, the third-largest credit-card network, sued in November 2004 after the U.S. Supreme Court ruled Visa and MasterCard, based in Purchase, New York, violated antitrust laws by preventing member banks from offering rival cards.

Citigroup Inc. and Bank of America, the two biggest U.S. banks by assets, later agreed to offer American Express services.

The Visa share sale was managed by JPMorgan and Goldman Sachs Group Inc. with assistance from 13 firms including Bank of America and Citigroup.

To contact the reporter on this story: Elizabeth Hester in New York at [email protected]; Hugh Son in New York at [email protected].

Last Updated: March 19, 2008 12:02 EDT

 

[Pound]

1. Stocks are most defnitely not currently making money after ridiculous crashes.
2. This buying is funded by credit -> huge problems that the US is currently paying for.

 

[cache]

that $17.9 Billion is not much, the same amount of money does not last a few days to stay in iraq.

 

[martinisky]

I was lucky to get in on the Visa IPO... quite an amazing return for one day. Part of me wants to take the money and run but its a good company and i'm an 'investor' so i will sit on it. It may fall back down to earth here in the next week or two back to IPO levels if not lower possibly but then i'll just buy more. Good company, solid fundamentals. And the best thing about Visa is, they have nothing to do with the credit crisis unlike some people may think. They do not take on consumer debt. Visa makes money on transactions, and IMO even in a recession people are still gonna be swiping their debit/credit cards all over the world.

Go Visa!


Hope everyone is having a good day.

 

[mmbullseye]

I've felt the recession. I had already accepted a job in commercial real estate to start in May. The credit markets dried up so there is now no buying or selling causing my job and many others at the company to be pulled.

 

[Name Trader]

I'd sell Visa at these levels and buy it back after it's fallen back when the economy gets worse.

I was watching Bloomberg earlier. An analyst there was making the same point about them being in the transaction business. They're only exposure to the credit crunch might be fewer transactions. But as martinsky said. People use their credit cards also when there is a credit crunch. Maybe even more if they can't get credit elsewhere.