A Look at Earnings: Visa, Interactive, McGraw-Hill

McGraw-Hill (NYSE: MHP) — Cloudy Forecast

Earnings Info: Earnings dropped 14%. MHP earned $1.07 a share compared to $1.23 in the same year ago period.

Sales fell 8.4%.

MHP still managed to beat the consensus estimates on both earnings and sales. However, Chief Executive Harold “Terry” McGraw said he now expects revenue for 2009 to fall about 7 percent — worse than the company’s previous forecast of a 5.5 percent to 6.5 percent decline.

Comment: With the sale of BusinessWeek to Bloomberg earlier this month, the media shifted its focus away from the dark cloud hovering over the ratings agency unit. Tread with caution and put on your skeptic hat with MHP.

Interactive Corp. (Nasdaq: IACI) — Service Magic Displays Growth, Diller Delivers

Earnings Info: Earned .16 cents a share compared to a loss of .11 cents a share in the same period a year ago. Earnings beat the consensus of analyst estimates.

The only IACI unit that reported revenue growth during the quarter was ServiceMagic, which operates Web sites that connect homeowners with home-improvement contractors. ServiceMagic’s revenue rose 30 percent to $43.9 million. IACI said the number of service requests rose 22 percent.

Sales declined 9%.

“We’ve been asked a lot whether we’re open to consolidating transactions in the area of search. The answer is yes,” Diller said.

Comment: In the world of Diller’s Deals, IACI will be looking to sell Ask.com — a smart move considering it never reached the heights of other search competitors. Known for having plenty of cash on hand, Diller will have his eyes on buying the next generation of internet properties: those that emerge strong and lead out of a recession.

Visa (NYSE: V) — 1 out of 6 Americans are unemployed … Charge it!

Earnings Info: Earned $.69 cents a share compared with a loss of $.45 cents a share in the same period a year ago.

Net operating revenue rose 10%.

“The U.S. and rest of world are still picking themselves up from the economic storm of the past year, [but] we are beginning to see some very early signs of stabilization and some positive trends,” Chief Executive Joseph Saunders said on the earnings conference call.

Visa also raised its dividend and authorized a share repurchase program.

Comment: Roughly 54% of all transactions will be made by plastic as the year 2012 is dialed up. Visa forecasted double digit revenue growth in 2010. With unemployment rising, one can only wonder how Visa crushed the quarter when carrying the brunt of a declining consumer.

Comments

[RK:]

"one can only wonder how Visa crushed the quarter when carrying the brunt of a declining consumer"

Really? I am surprised by the comment. Visa is a toll booth for credit and debit transactions; it does not lend money to consumers. Same with Mastercard. American Express is different.

As long as the volume of paperless transactions grow in the world, Visa and Mastercard will grow. Hope this helps.

Oct 30 12:40 AM