AmEx Sets Up Digital Commerce Fund - Analyst Blog
09 Novembre 2011 - 1:45PM
Zacks
Yesterday, American Express Company (AXP)
(AmEx) announced the creation of a $100 million investment fund in
order to expand the company’s presence in the digital commerce
market.
Accordingly, the company will acquire minority stakes in various
start-ups and form partnerships with various companies,
particularly those involved in mobile and online payment
management, data analysis, loyalty and rewards, security and fraud
detection, personalized offers, location-based and fees-based
services.
The investments and deals will be made over the next few years
and will be managed from AmEx’s new office in Silicon Valley.
Around 30-50 people will be hired over the next couple of years for
identifying and developing deals.
AmEx is already involved in various digital commerce
initiatives. In September 2011, the company announced its first
ever collaboration with China’s largest internet service provider –
Tencent Holdings Ltd. to help provide cross-border purchases to
Tencent’s online payment unit – Tenpay.
In August 2011, the company announced a partnership with Verizon
Wireless to integrate AmEx’s Serve on Verizon mobile phones and
tablets. Serve is the next-generation commerce and digital payment
platform, using which Verizon Wireless customers will be able to
make payments for purchase of goods and services directly from
their mobile phones and tablets. Earlier in April 2011, AmEx
invested in Payfone, which is a mobile payment processing
company.
The move to invest in the digital commerce business is a prudent
step, considering the rapidly changing payment scenario in which
online and mobile payments are gaining significance. While it will
help AmEx in staying up to date with emerging technology and
establishing a foothold in the digital commerce space, it will also
provide the other companies access to AmEx’s sizeable customer
base, merchant network, global presence, consumer data and payment
network.
Earnings Review
AmEx reported third quarter 2011 operating earnings of $1.03 per
share, comfortably ahead of the Zacks Consensus Estimate of 96
cents and 90 cents recorded in the year-ago quarter.
The Zacks Consensus Estimate for fourth quarter earnings is
currently pegged at 98 cents per share, up about 4.2% year over
year. Of the 17 firms covering the stock, 9 revised their estimates
upward, while 5 downward revisions were witnessed in the last 30
days.
For 2011, earnings are expected to be about $4.05 per share,
climbing about 19% from 2010.
AmEx competes with Discover Financial Services
(DFS), Visa Inc. (V) and MasterCard
Incorporated (MA). The company carries a Zacks #3 Rank,
which translates into a short-term Hold rating.
On Tuesday, the shares of AmEx closed at $51.34, up 0.18%, on
the New York Stock Exchange.
AMER EXPRESS CO (AXP): Free Stock Analysis Report
DISCOVER FIN SV (DFS): Free Stock Analysis Report
MASTERCARD INC (MA): Free Stock Analysis Report
VISA INC-A (V): Free Stock Analysis Report
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