“Visa’s IPO Is Worth a Close Reading” (via WSJ)

Herb Greenberg reports in The Wall Street Journal on March 22 [Page A11, subscription required] on what we have long been mentioning – The Visa IPO risk factors. 

Unfortunately, it wasn’t until after the drunken jubilation subsided that investors are beginning to understand what is at stake.  We posted the Visa Inc. SEC filing and risk factors on Dec 22.  Why was the media as negligent as investment advisers and underwriters in better not explaining the facts behind the largest IPO in our nation’s history?  Was it greed, or the rush to get the deal done at all costs.  Now that the party is over and that window of opportunity to complete the IPO is sealed, sobriety comes in a few weeks, when the billions in Federal Reserve loans are called.   

Click here to read the Herb Greenberg WSJ article.

Excerpts:

• “Investors generally overlook “risk factors,” as they are called. These can be found in all IPO prospectuses and 10-K annual reports filed with the Securities and Exchange Commission. This is where the company is supposed to bend over backwards to tell you where the booby traps might be.”
• “Much of it is boilerplate, but Visa’s warnings go beyond mere boilerplate to some specific issues that could very well spook investors if and when they ever make it into the headlines.  Consider, for example, that the first eight pages of its risk factors are devoted to legal and regulatory matters. Most companies usually start with business risks, but with Visa — and MasterCard — the lawyers (and some politicians) have had a field day.  Perhaps the stickiest concern has to do with lawsuits, as Visa puts it, over the amount of money the credit-card companies charge merchants.”
  
• What is the Federal Reserve’s Role in the Visa IPO?
  
• How the Fed’s $200-Billion Intervention Indirectly Boosts Visa’s IPO Valuation
  
•  Why Should The Public Bail Out Visa and the Banks? 

Visa Inc. Files 10-K Annual Report, Amends S-1 Registration
key point: “Failure to successfully defend or settle the interchange litigation would result in liability that to the extent not covered by our retrospective responsibility plan could have a material adverse effect on our results of operations, financial condition and cash flows, or, in certain circumstances, even cause us to become insolvent.” 

“Visa: Bailing Out The Banks” (NY Times)

“Should You Join the Visa IPO Craze?” (via Charlotte Observer)

Visa Inc. IPO Largest in US History; First it was 5, then 10 and Now $18.8 Billion – That’s Some Rich Valuation Appreciation

Visa’s Inc’s $10,000,000,000 Misguided Hedge From Litigation (WayTooHigh.com)

Understanding the Word “Insolvency” Is Crystal Clear

Thousands of Banks Pin Hopes on Visa Inc. to Bail Them Out

“Significant Victory” Announced Against MasterCard by Class Plantiffs

 Want to know more about lead plaintiff ScanMyPhotos.com?  Click here and read their daily blog: Tales from the World of Photo Scanning

Visa, Inc. Due Diligence: Have Investors Talked With Merchants?

After reading the Visa, Inc. IPO Risk Factors, we wonder whether investors will actually stop by and talk with the millions of merchants, companies and organizations which are forced to accept MasterCard and Visa – the two control a whopping 80% market share of all electronic payment processing solutions.  For us, the key word is “Interchange” and the below thousand plus news and commentary postings by WayTooHigh.com provides just the start.

Visa and MasterCard Adjusting Interchange Rates

“Visa, Inc. FORM S-4 SEC Registration Statement” (click here to view the SEC filing)

———————————————————- 

Want to know more about lead plaintiff ScanMyPhotos.com?  Click here and read their daily blog: Tales from the World of Photo Scanning

Visa Inc. IPO Update

Although it is just our opinion that the Visa IPO will be derailed, we still assert that potential investors are still hypotized with the same exuberance that Bear Stearns’ chairman, James Cayne possessed when playing in the recent North American Bridge Chapionship in Detroit. 

According to The Wall Street Journal, Mr. Cayne was away from a cell phone and email during last summer, during the firm’s impending fiscal crisis.  Even our company, ScanMyPhotos.com is always accessable with iPhone, 24/7 Live Support and other tools to provide instant access.

In the case of Mr. Cayne, as quoted in the Journal [“Cayne on Golf Links, 10-Day Bridge Trip Amid Summer Turmoil”] by Kate Kelly [Nov 1], “[a]ttendees say Mr. Cayne has sometimes smoked marijuana at the end of the day during bridge tournaments.”  In the case of what might turn into an oversubscribed Visa IPO, unless Visa pulls the plug, we can’t help but ask what the new shareholders are also smoking? 

The IPO, along with its risk factors represents a new vanguard of greed in the eye of the financial markets’ tornado-like storm.

——————————————————

Want to know more about lead plaintiff ScanMyPhotos.com?  Click here and read their daily blog: Tales from the World of Photo Scanning

“Extra Credit for Visa’s IPO” (BusinessWeek)

Click here to read the March 10, Ben Steverman BusinessWeek article on the Visa IPO.

“Should You Join the Visa IPO Craze?” (via Charlotte Observer)

Click here to read the Sunday, March 2, article in The Charlotte Observer. 

It included a listing of considerations before investing in the pending Visa IPO which was written by reporter Christina Rexrode, but was absent of a giant risk factor.  Among the pros and cons, there was no mention of the merchant interchange litigation with threatens the continued operation of the giant credit card association, and as described in its SEC filing, might lead to insolvency. 

Read the below 998 WayTooHigh.com posting for more reasons why this might not be the smartest of investments, other than for the thousands of banks which are racing to bail out.

“[B]anks Also Stand to Shed Some Liability” (The Charlotte Observer)

—————————

According to Christina Rexrode’s Feb 27 The Charlotte Observer article, the thousands of banks that own Visa will adjust their valuation once the adjusted post-IPO market value takes effect.  This means giant windfalls for the banks. 

Abstract of Key Points From the Article

• If the public offering goes through, the banks also stand to shed some liability.
• The banks hope that taking Visa public will get it off the hook in those lawsuits, according to some analysts.
• Gwenn Bezard, research director at Boston’s Aite Group said: “[the banks] are offloading the risk to someone else — investors.”
• Visa will set aside about $3 billion of the money it raises in a stock offering for litigation costs, according to [their filing statements].
• When MasterCard went public in 2006, the lifting of legal liability from the issuing banks was the deal’s main driver, said Eric Grover of Intrepid Ventures. …”Absent the legal liability, I don’t believe MasterCard would have gone public.”   “It’s a bit of a Russian roulette here…”  “If it were to go to trial, there’s a nonzero chance of a catastrophic event.”

[Click here for recent recommendation against MasterCard’s IPO]

Want to know more about lead plaintiff ScanMyPhotos.com?  Click here and read their daily blog: Tales from the World of Photo Scanning

Visa Inc. IPO Largest in US History; First it was 5, then 10 and Now $18.8 Billion – That’s Some Rich Valuation Appreciation

Click here to read the AP story on Visa’s planned ~$19 billion IPO.

click here to read Reuter’s story on the Visa Inc IPO

[WayTooHigh.com Editor’s note: Investor’s, drunken with jubilation over MasterCard’s valuation, would be wise to sober up and read the Risk Factors which Visa Inc explains could lead to insolvency of our merchant antitrust litigation prove successful.  Forget not what MasterCard did in an attempt to transfer its legal liabilities from the banks to shareholders.  The Visa IPO smacks of a giant shell game. The same banks which owned MasterCard, tested the waters with by selling off a chuck of the much smaller credit card association.  Now, the same thousands of banks – facing billions in losses from other management missteps are now seeking to cash out again, and at a much higher level.  Check back often for regular updates and commentaries on the planned Visa Inc. IPO].

Related WayTooHigh.com postings

“Significant Victory” Announced Against MasterCard by Class Plantiffs

 “Visa’s Initial Offering Expected to Fetch $5-Billion” (The Globe and Mail) [that’s some inflation…. From $5 billion to $19 billion?]

Will Visa USA’s “Consumer Education” Tool be Silenced During Their IPO?

“Visa’s Pending IPO”

Visa’s Inc’s® $10,000,000,000 Misguided Hedge From Litigation (WayTooHigh.com)

“Visa’s IPO Use of Proceeds Plan and Interchange Overview (commentary, WayTooHigh.com)

“Visa Reveals Plan to Restructure for IPO” (via AP)

  

 Want to know more about lead plaintiff ScanMyPhotos.com?  Click hereand read their daily blog: Tales from the World of Photo Scanning

Interchange Fees Must Be Important: Mentioned 145 Times

In the just published Visa Inc. 10-K SEC filing [click here], the term “interchange” was mentioned 145 times.  While Visa Inc. explains they “administer the collection and remittance of interchange fees.. [they] generally do not receive any portion of the interchange fees.”  However, while merchants and consumers are faced with this annual $40 billion hidden tax, Visa hints that it is not a big deal.  It is a $40 billion annual big deal.

[Commentary: WayTooHigh.com]