American Express Co reported quarterly earnings that narrowly missed Wall Street estimates and said it would cut 550 jobs as it handles more customer services on the Internet.

The company's shares were down 2.7 in afternoon trading after the credit card lender and payment processing network said it earned $1.1 billion, or 88 cents per share, in the fourth quarter. That included a charge of $74 million, or 6 cents per share, for job cuts and the closure of customer service centers.

Excluding the charge, the company's profit of 94 cents a share missed analysts' average estimate by one cent, according to Thomson Reuters I/B/E/S.

The earnings miss was an unpleasant surprise to some investors, considering positive trends on spending volume and credit. American Express Chief Executive Kenneth Chenault cited record levels of customer spending on their credit cards, and said credit losses continued to shrink.

The job cuts also revived investor concerns that financial regulation could hurt the company's future growth.

You always want to be rationalizing your existing operations to be more efficient ... but if they were expecting a robust growth environment, you might not be seeing significant head count cuts, said Intrepid Ventures payments consultant Eric Grover.

Investors are wary of the potential effect of increasing U.S. financial regulation on American Express. The company's shares fell about 8 percent last month, before largely recovering, after the Federal Reserve proposed rules that would slash the fees that merchants pay banks every time a customer buys something with a debit card.

While American Express does not have a debit card business, its credit card fees are some of the highest in the industry, and investors are worried that it will lose business as merchants ask customers to pay with cheaper debit cards.

The Fed's rules will indirectly have a negative impact on AmEx -- that's a big deal, Grover said. If merchants are in a position to discount, AmEx is going to get whacked in a big way, and they're going to have to bring down their pricing.

American Express shares were down 3.1 percent to $44.91 in afternoon trading.

MOVING JOBS AROUND

Sandler O'Neill analyst Michael Taiano said the company may have decided to reinvest more of its profit in marketing and technology rather than reserve it for earnings.

He also said American Express spooked investors by reporting earnings on Wednesday but making the Street wait until Monday for a full explanation. The fourth-quarter results were not due until Monday.

The problem with doing something like this is, you give the bottom line number without all the details and people start to speculate, he said.

Even including the restructuring charges, American Express' profit will rise by nearly half from the year-earlier $716 million, or 60 cents a share. Declining loan losses let the company reduce the amount of money set aside for bad loans, boosting profit.

More American Express customers are handling routine matters through the Internet and their smartphones, reducing the number of telephone calls to the company's service centers. The company said it has left many customer service jobs vacant after employees leave, which means it is now paying rent and other real estate costs for centers that are too large for its needs.

About 3,500 jobs will be affected by the changes in customer service, including about 3,000 that will be moved to different locations. The company will close a customer service center in Greensboro, North Carolina, and send the jobs to its three other U.S. customer service locations, in Fort Lauderdale, Florida; Phoenix, Arizona; and Salt Lake City, Utah.

The company will relocate some jobs in Madrid to Britain and Argentina, and will move service support for its Japanese card business to Japan from Australia.

American Express spokeswoman Joanna Lambert said some affected U.S. employees would be able to relocate to jobs at other customer service centers, and others would be able to work from home. American Express was informing employees of the changes on Wednesday.

The company said the moves should generate additional charges of $60 million to $80 million this year, related to future real estate closings and employee compensation. It plans to finish the process by the end of the year.

Starting next year, American Express expects the moves to reduce expenses by $70 million a year.

(Reporting by Joseph A. Giannone and Maria Aspan; Editing by Matthew Lewis, Robert MacMillan and John Wallace)

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