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As seen with the Visa (NYSE: V) IPO this week, there's definitely interest in the credit card industry.
However, not all companies are benefiting. For example, take a look at Discover Financial Services (NYSE: DFS), which became a public company in June. Since then, the stock has gone from $32 to $15.20.
Well, this week Discover announced its fiscal Q1 results. With the weak economy, it's no surprise that the company is feeling the pain and earnings plunged 65% to $81.2 million, or $0.17 per share.
While a chunk of this came from the unloading of its UK division (called Goldfish), the good news is that the transaction should help free up capital and provide more focus. This will certainly be critical in dealing with the inevitable charge-offs and delinquencies. Keep in mind that Discover set aside $305.6 million for credit losses.
Yet, investors are still showing caution. In yesterday's trading, Discover's stock fell 12%.
Tom Taulli is the author of various books, including The Complete M&A Handbook
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