PURCHASE, N.Y. – MasterCard yesterday reported a third quarter loss of $193.6 million due to a $515.6 million after-tax charge for its share of a settlement of an antitrust suit with Discover Financial.
MasterCard and Visa agreed last week to pay Discover up to $2.75 billion to settle an antitrust suit filed by Discover in 2004. The lawsuit claimed that MasterCard and Visa had harmed its business by preventing their member credit unions and banks from issuing cards for Discover's network. MasterCard's portion of the settlement is $862.5 million.
Visa posted a $356 million third quarter loss last week due to its litigation costs.
MasterCard's third quarter charge wiped out a $322 million profit the cards giant would have reported for the quarter. Third quarter revenues increased 24% to $1.3 billion, fueled by a jump in gross dollar volume and transactions.
For the first three quarters of the year, MasterCard recorded a huge $2.5 billion expense for both the Discover settlement and the settlement of a similar suit with American Express, pushing it into the red for the first nine months to the tune of $493.4 million, or $3.79 a share, compared to a profit of$781.7 million, or $5.76 a share, for the first nine months last year.
