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AmEx does more in 2Q
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July 26, 1999: 3:22 p.m. ET
Net hits record $646M as financial and travel service units rack up gains
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NEW YORK (CNNfn) - American Express Co. said Monday second-quarter income rose 12 percent, topping Wall Street estimates, as growth in card membership rose faster than expected.
The New York-based financial services company earned a record $646 million, or $1.41 per diluted share, up from $578 million, or $1.24, in the same quarter a year ago.
The consensus estimate of analysts was for the company to report $1.40 a share, according to First Call Corp., an earnings tracking firm.
Revenue rose 12 percent to $4.8 billion.
Analysts said the strong economy, an upswing in card member accounts and revenues from each of those accounts were largely responsible for the rise in income during the quarter.
"It was pretty solid -- they met expectations, there were no surprises, and they showed credit improved -- reflecting a somewhat stronger economy," said Robert Hottensen, an analyst at Goldman Sachs, who has a "market outperform" rating on AmEx.
American Express cited a 14-percent gain in net income to $411 million from its travel services unit, led by the addition of about one million cards during the quarter. That came despite AmEx's decision last year to pull out of the race for an account with the U.S. government worth $3.5 billion in total yearly spending and totaling about 1.6 million cards.
Said one analyst with a "buy" rating on the stock, who didn't want to be identified: "I was particularly impressed with the re-acceleration of card member growth in the United States."
Also behind the better numbers was a 14-percent gain in net income in its financial services business to $242 million due to higher fees.
American Express said new accounting rules, which require the company to expense software costs immediately rather than pay them over time, caused a one-time benefit of $67 million during the quarter. That was offset by increased investment spending and thus had no impact on net income.
Shares of American Express (AXP), the nation's third-largest diversified financial services company and one of 30 issues in the Dow Jones industrial average, rose 1-1/16 to 136-5/8 Monday after heading lower at the start of the session. 
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American Express
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