Relationship Management: Visa Touches Base with Wall St

By Lindenmayer, Isabelle | American Banker, March 22, 2006 | Go to article overview

Relationship Management: Visa Touches Base with Wall St


Lindenmayer, Isabelle, American Banker


At its second meeting in two years with Wall Street analysts, Visa U.S.A. chief executive John Coghlan said it does not plan to go public any time soon.

About 40 analysts attended last week's meeting in New York. Afterward, they still disagreed on whether the San Francisco association will follow MasterCard International's lead and file for an initial public offering.

Though Visa ruled nothing out at the meeting, Mr. Coghlan noted that it has made other changes to its governance structure, and said it is waiting to see how MasterCard's IPO goes, according to analysts who attended.

The association also provided analysts with an update on efforts to compete with American Express Co. and said it has no immediate plans to enter the remittance market.

Analysts also disagreed about how much of a threat Visa poses to Amex.

Visa held its first such meeting in September 2004, and it has met individually over the past year with analysts who cover the publicly traded Amex (many of whom are likely to cover MasterCard after it goes public).

Will Valentine, a spokesman for Visa, said it holds these meetings because "Wall Street analysts are important third parties whose influence and opinions are critical to [public] understanding for the payments industry."

David Hochstim of Bear, Stearns & Co. wrote to in a note to clients Monday: "The company has no IPO plans, believing instead that increased disclosure, its independent board, and increased attention to profitability are sufficient to reduce the long-term litigation risk."

However, Gregory Smith, an analyst at Merrill Lynch & Co., echoed what many industry experts have been saying over the past few months when he wrote, "We think it is likely that Visa will eventually restructure a la MasterCard."

A number of analysts agreed that Visa, through its high-end Signature card, has created competition for Amex but is unlikely to displace it in the premium card market.

"The meeting didn't provide any information indicating Signature's growth is coming at Amex's expense," Mr. Hochstim wrote. "We see Signature more as a retention tool for Visa issuers than a card that has sufficient appeal to attract American Express customers."

According to Mr. Hochstim, the Signature rewards program provides less value than Amex's. In addition, Amex customers generally spend more on their high-end cards than Signature cardholders do, he said. …

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