Capital One Takes Loss

Capital One Financial Corp. took a first-quarter loss of $111.9 million, compared with earnings of $548.5 million a year ago. The company generated $2.88 billion in revenue, down from $3.87 billion in first-quarter 2008.

The company racked up $162.7 million in marketing expenses during the most recent quarter, compared with $297.8 million a year ago.

The company has added $124.1 million to its estimate of charge-offs during 2009. Capital One’s financial operations include issuing credit cards.

The Observer’s Take: There are a few key considerations here. Capital One is a huge direct mailer, especially for its credit card operations. A cut in its marketing budget does not portend well. Here’s something else that doesn’t: There have been recent rumblings from the Obama administration to curtail interest rates and aggressive lending practices, as well as several bills introduced on Capitol Hill to rein in a number of credit card issuer practices. A further drop in profitability among these marketers will curtail mail activity – but it could also be a boost for data analysts, should these marketers be forced to mail smarter due to smaller margins.