Discover Financial losses stem from overseas arm

NEW YORK -- Discover Financial Services LLC posted a loss in its fiscal fourth quarter after taking a $391 million charge because of its struggling card business in Great Britain.

The Riverwoods-based credit card issuer reported a net loss of $84.1 million, or 18 cents per share, for the September-November period. The company reported a profit in the same period last year of $186.5 million, or 39 cents per share.

The company warned earlier this month that it would be hit by a big impairment charge because of Goldfish, its troubled Visa and MasterCard business in the United Kingdom, where the consumer credit environment became shaky well before the U.S. housing slump.

Excluding the Goldfish charge, Discover said income rose 4 percent to $195 million, or 40 cents per share.

As opposed to most U.S. companies with international operations, Discover's domestic segment fared much better than its business abroad. In the United States, pretax income for the fourth quarter jumped 43 percent to $328 million, as the company cut costs and saw managed loans rise 5 percent.

Discover made its public trading debut July 2 on the New York Stock Exchange, after spinning off from Morgan Stanley just a few weeks before the financial sector started plunging due to soaring foreclosure rates and a freeze-up in the credit markets.

The Riverwoods, Ill.-based company's stock has dropped more than 45 percent from a high of $29.15 on its first trading day.