Monday, May 15, 2006

"Plastic Under Attack" (Fortune)

From Fortune Magazine, May 29th edition:

,,,"As for MasterCard's post-IPO prospects, Sanford Bernstein analyst Howard Mason says that the lawsuit could be a huge cash drain. Mason points out that the closest settlement precedent was in 2003, when MasterCard paid merchants $1 billion regarding alleged antitrust violations related to its debit cards.

In a May 8 report, Mason wrote that the liability this time "could be meaningfully higher." That's because the current suit relates to MasterCard's credit and debit business - three times the size of its debit business alone.

"MasterCard's legal liability could exceed its current book value of $1.3 billion," he notes.

Of course, by taking it public the bank consortium that has long owned MasterCard will not have to pony up the full cost of any settlement. That task will fall to shareholders. And unlike MasterCard's long-running ads, that's anything but priceless."

[Source: Fortune Magazine]