VeriFone Plunges After Profit-Forecast Trails Estimates

VeriFone Systems Inc. (PAY) plunged the most in more than four years after the maker of credit-card terminals forecast second-quarter profit that missed analysts’ estimates, amid weak economic conditions in Europe.

The shares tumbled 43 percent to $18.24 at the close in New York, for the biggest intraday decline since November 2008. Earnings excluding some items will be 45 cents to 50 cents a share in the quarter ending in April, San Jose, California-based VeriFone said in a statement yesterday. Analysts on average had predicted profit of 80 cents a share, according to data compiled by Bloomberg.

VeriFone makes credit and debit card-accepting terminals that are used in retail stores, gas stations and taxicabs. Verifone is used in about half of New York’s taxicabs, and serves an estimated 35,000 taxis in the U.S. Beyond Europe, VeriFone said it experienced lower-than-anticipated sales from customers in Brazil, and that it had an increase in deferred revenue from clients in Africa and the Middle East.

“The preannouncement is very bad; they are missing their targets by a very wide margin,” Gil Luria, an analyst at Wedbush Securities Inc., said in a telephone interview. Luria has a neutral rating for VeriFone.“The macroeconomic conditions are certainly not enough to explain such a dramatic shortfall.”

VeriFone also announced preliminary first-quarter adjusted profit of 47 cents to 50 cents a share, less than the company’s prior projection of as much as 73 cents.

Recent acquisitions probably didn’t boost VeriFone’s growth as much as projected, and may have to be restructured, Luria said.

Last year, Verifone bought LIFT Retail Marketing Technology Inc., a provider of convenience-store digital-marketing systems, and Swedish payment-services provider Point, as well as other companies.

Victoria Brown, a spokeswoman for VeriFone, declined to comment.

To contact the reporter on this story: Olga Kharif in Portland at okharif@bloomberg.net

To contact the editor responsible for this story: Tom Giles at tgiles5@bloomberg.net

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