UPDATE 2-Global Payments sees Q2 profit at Q1 levels

Mon Oct 11, 2010 6:27pm EDT

* Q1 adj shr from cont. ops $0.67 vs est EPS $0.69

* Q1 EPS $0.61, rev up 7 pct to $440.1 mln

* Maintains FY 2011 rev, earnings outlook * Inks Visa sponsorship deal with Canadian firm

* Shares down 4 pct after market (Recasts; adds conference call details, updates shares)

Oct 11 (Reuters) - Global Payments Inc (GPN.N) reported a quarterly profit below market view, hurt by higher expenses, and the credit card processor said it expects second-quarter earnings to be at around the same levels as the first quarter.

The Atlanta-based company also said the third quarter should be seasonally weaker but that the fourth quarter would be "quite strong."

The company said it executed a Visa sponsorship agreement with a Canadian financial institution starting in March 2011, but did not name the financial institution.

In June, Canadian Imperial Bank of Commerce (CM.TO) notified Global Payments that it would not renew its Visa sponsorship agreement with the company when it expires in March 2011. [ID:nSGE65HOHT]

Global Payments, which had filed with Canadian regulators to start a loan company for directly processing Visa transactions in the country from March 2011, said it continues to pursue setting up its own bank in Canada.

For the first quarter ended Aug. 31, excluding items, the company reported earnings of 67 cents a share.

Analysts on average were looking for a profit of 69 cents a share, before items, according to Thomson Reuters I/B/E/S.

"First quarter results reflect strong growth in the U.S. and Asia Pacific," Chief Executive Paul Garcia said in a statement.

"Our annual expectation for overall international revenue growth in dollars remains unchanged at low single digits, and we expect material margin expansion in international this year," Chief Financial Officer David Mangum said on a post-earnings call.

International merchant services contributed about 23 percent, or about $103.3 million, to the company's total quarterly revenue.

Shares of the company, which have gained about 6 percent since it reported fourth-quarter results in July, were down about 4 percent at $40.50 in trading after the bell. They closed at $42.34 Monday on the New York Stock Exchange.

For alerts, please double-click [ID:nWNAB3476] [ID:nWNAB3482] (Reporting by Brenton Cordeiro in Bangalore; Editing by Unnikrishnan Nair)

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