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MasterCard Inc. Q3 2009 Earnings Call Transcript
Author: 123jump.com Staff
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Last Update: 11:36 PM ET November 09 2009

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MasterCard Incorporated third quarter revenues rose 1.5% to $1.36 billion and net income was $452.2 million or $3.45 a share.


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Thanks, Moshe.

Operator

Your next question comes from the line of Dan Perlin with RBC Capital Markets. Please proceed.

Dan Perlin - RBC Capital Markets

Thanks. I was wondering if you could comment on how you think about the interrelationship between your incentive fees and your marketing spend? With marketing being down 33% year-to-date and incentives being basically flat, I''m wondering, if you''re shifting some of those dollars out of marketing and better utilizing them in tying up some of these contracts in the incentive line?

Martina Hund-Mejean

Dan, no, I cannot report that we had a significant shift there at all. As you know, in a number of our large customer business agreements, we have a number of different incentive line items and one of them could be that we''re supporting a certain marketing program for our customers and that has been the new agreements and with the renewed agreements, the same way -- that has been done the same way as we have done it in the past. We don''t have a significant shift from one line item to the other.

Dan Perlin - RBC Capital Markets

So, you don''t have a lot of, I guess, control over really that incentive line incrementally when you don''t need to -- when you can kind of throttle back on your advertising? I know a lot of it is pre-contractual, but I thought that you might have more control over that now.

Martina Hund-Mejean

Dan, even, you know, for all of the customer business agreements where we have these kind of incentives negotiated, there are certain programs that the customers are doing where we are fully aligned between MasterCard and the customer. I would say that there is quite a bit of control over how those programs are being done and how they''re being spent and when they''re being spent. A good alignment between our customers and our results.

Dan Perlin - RBC Capital Markets

Okay. And then my last question is acquisition opportunities, as you guys look around the world, what markets do you think you see out there that you need to be in that you maybe aren''t and if you did an acquisition, would it help you drive the category more broadly? Thanks and I''ll jump off.

Robert Selander

Hi, Dan. I wouldn''t want to pick a specific geography. Let me just make a couple of observations, though. First of all, as you know, we''ve been looking at ways to enhance our presence in the processing arena, bringing up our platform, for example, that I mentioned, our IPS platform to support debit, as well as prepaid with a broader array of functionality, is one of the things that we''ve been investing in now for a couple of years and obviously in the case of the U.S.A.A. transaction, that''s an important process that we''re going through in terms of getting them on that platform.

When I think about other places where we don''t have the processing presence, we do virtually all the domestic processing in the U.S., Canada, the U.K., Australia and Brazil, although, there are clearly additional opportunities to broaden our offering in those markets. In most of the rest of the world, we don''t have that significant a presence.

So, you''ve seen some of our activities over the last several years. In ''08, we purchased what was called at that time Europay France. Earlier this year, we increased our ownership in SPS, a processing company down in Australia where we''re now -- I believe it''s about a 70% owner of that company. So, we continue to opportunistically look at these types of areas. I''d also indicate that in the innovation area, we''re increasingly seeing companies that have come up with great ideas that we''re working with day-to-day and we may take a small position with them from an equity standpoint, we may -- in order to help support their development.

One company that we thought was particularly attractive was Orbiscom that we acquired, I guess, it was in December of last year, the Irish company which has the inControl platform that we''re actively marketing around the world now.

All of these opportunities go through the basic screening of do they fit with our strategy, do they make sense financially, do they have the management if we don''t have the knowledge and capabilities of running them and can we integrate them. And that''s sort of the pattern we''ve been using and clearly with our balance sheet and capital position, we think we have the flexibility when we see opportunities to move on them.

Dan Perlin - RBC Capital Markets
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