Bloomberg News
NEW YORK - American Express Co. said its fourth-quarter profit rose 14% on higher credit and charge card revenue and mutual fund fees.
Net income rose to $606 million, or $1.33 a share, from $530 million, or $1.16, the year earlier. Revenue rose 15%, to $5.23 billion.
The company also announced a 3-for-1 stock split. Its shares fell 0.25%, to $151.3125, on the news.
American Express, led by chairman and chief executive Harvey Golub and his heir apparent, president Kenneth I. Chenault, continues to benefit from a robust U.S. economy, as consumers spent on average 13% more. The New York-based travel services and financial adviser also issued 7.8% more cards. Profit at its travel agency rose 15%, and its mutual fund and financial advisory unit was up 14%.
"American Express has got a great story because it's all balanced geographically and with the products," said Mark Stickle, an analyst at Banc One Investment Advisors, before the earnings report was released. Banc One owns American Express stock.
The card company's shares last year gained 62%, outperforming the Dow Jones industrial average, which rose 25%. Return on equity rose to 25.3%, from 24%.
Separately, the company said it is having trouble meeting demand for its new "blue" credit card.
It is writing would-be customers to apologize for its slow pace of filling orders. American Express, which unveiled the card in September, said unanticipated demand and production glitches have caused delays of as long as two-and-a-half months in delivering the cards.
"It's been difficult for us to keep up with demand," Alfred F. Kelly Jr., general manager, consumer cards, wrote in a letter to one new customer.
The company is counting on the new card, which has an embedded computer chip, to ease buying on the Internet. It said it is getting more Web applications for blue cards than for any of its other charge or credit cards.
Company spokeswoman Judy Tenzer said demand for the card has been more than double what was expected. This and initial delays in production have created a backlog of orders for the plastic cards. She would not elaborate on the production difficulties.
"We are very close to being caught up," Ms. Tenzer said.
Most customers should get their cards within three weeks of applying. The chip causes the card to take longer to produce and deliver than the roughly 10 days needed for the company's other cards, she said.
Bruce Brittain, who heads an Atlanta marketing firm, said he applied for a blue card in early November and got a letter Dec. 1 saying it would take another four weeks before he would receive his card. A few phone calls later, the card still hasn't come.
