Despite solid third-quarter earnings and signs of a healing economy, MasterCard Inc. is continuing to cut jobs and plan marketing expenditures cautiously in view of what it expects will be a slow convalescence for consumers.

The Purchase, N.Y., payments company said Tuesday that it swung to a profit of $452 million in the third quarter as net revenues grew 6.6% from the previous quarter and 2% from the year earlier, to $1.4 billion.

Chief Executive Robert Selander said on a conference call that he believes "the worst is behind us," but he cited forecasts calling for a sluggish recovery and said the company remains concerned about "the health of the consumer."

"The country is still in a stable spending environment, rather than rebounding into a strong expansion," Selander said.

In the United States, purchases on MasterCard-branded credit cards fell 13.9% from the year earlier, to $121 billion in the third quarter, less than the 15.6% second-quarter decline. Debit card purchases grew 6.9% from the year earlier, to $83 billion, better than the 3.4% increase in the second quarter.

Selander said that the volume of transactions MasterCard processed grew slightly in the first four weeks of October, compared with a "low single-digit decline" in the third quarter.

Martina Hund-Mejean, MasterCard's chief financial officer, said in an interview that there is "certainly some stabilization" in payment trends. But she noted that the collapse in spending in late 2008 is making year-over-year comparisons relatively easy.

General and administrative expenses fell 6.3% from the previous quarter and 8% from the year earlier, to $474 million in the third quarter, which included severance payments of $31 million for 150 people.

MasterCard notified its work force this week about another severance program for employees 55 and older who are willing to give up their jobs. Hund-Mejean said it is too early to say whether it will lead to more involuntary cuts if there are insufficient volunteers; she noted alternatives like retraining.

The company hopes to put the layoffs behind it, she said. "There is a lot of uproar for the organization, so we want to get done and be on our way for 2010," she said.

Though the severance programs involve net reductions in personnel and costs, Hund-Mejean emphasized that the company is also shifting focus to products and geographic areas that are showing strong growth, like the Asia-Pacific region, the Middle East, Africa and Latin America. "We have to reallocate resources to those kind of markets," along with "new payment forms" such as electronic commerce and prepaid, she said.

MasterCard has encountered unexpected, but transitory, friction in restarting its marketing machine.

In July, the company projected that spending on advertising would be significantly higher in the second half than in the first half. But ad spending fell 3.7% from the previous quarter and 29.4% from the year earlier, to $174 million.

"We've been reducing our spend[ing] all this time, then we have to [go] back into the market and have to tell all your [advertising] agencies, 'We're turning it back on. Find me the right spots,' " Hund-Mejean said. "It's just a lot of work that we probably underestimated."

Nevertheless, the company expects to spend the full amount it had planned for the second half — but concentrated in this quarter.

The company said it was too soon to forecast advertising spending for next year, but Selander said MasterCard expects "a less robust [economic] recovery than we might like and we're managing our business that way."

Selander said MasterCard renewed and extended its issuing-business agreement with Bank of America Corp. last month.

MasterCard posted a net loss of $194 million in last year's third quarter, when it recognized $828 million of expenses associated with the settlement of litigation.

Last quarter's earnings per share of $3.45 were 51 cents higher than the average analyst estimate. Nevertheless, MasterCard stock fell 1.6% in trading Tuesday. Robert Napoli, an analyst at Piper Jaffray & Co., said he was surprised by the drop, and speculated that the strong showing made by Visa Inc. in its quarterly report last week may have set extremely high expectations for MasterCard.

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