VeriFone Systems Inc. (PAY) plunged 21 percent after the maker of credit-card terminals forecast fiscal third-quarter sales and profit that missed estimates amid product delays in several global markets.
The shares tumbled to $17.37 at the close in New York, for the biggest decline since Feb. 21. Earnings excluding some items will be about 20 cents a share on revenue of about $400 million for the period, which ends in July, San Jose, California-based VeriFone said in a statement yesterday. Analysts on average had predicted profit of 51 cents on sales of $460.2 million, according to data compiled by Bloomberg.
A canceled distribution arrangement in the Middle East and lags for new product introductions in Europe, Brazil and Canada are curbing sales of VeriFone’s credit and debit-card accepting terminals that are used in retail stores, gas stations and taxicabs, the company said. Threatened by newcomers like Square Inc., EBay Inc.’s PayPal, Intuit Inc., Groupon Inc. and Bank of America Corp., VeriFone has been losing share in many markets.
VeriFone faces “continued turbulence on most fronts,” Michael Grondahl, an analyst at Piper Jaffray Cos., wrote in a research note today. There are “product development delays in many geographies that drove customers to purchase competitors’ products as a patch,” he said.
VeriFone’s market value shrunk to about $1.89 billion as the shares retreated to a 52-week low, making the company a more attractive acquisition target, according to Wayne Johnson, an Atlanta-based analyst at Raymond James & Associates Inc. Machines entering the market later this year are expected to bolster revenue, which may prompt takeover interest from companies such as Fujitsu Ltd., he said.
“It makes them a potential target for a strategic buyer,” Johnson said in an interview. “This should essentially be self-corrected really by the fourth quarter. I don’t think it’s a falling knife.”
Victoria Brown, a spokeswoman for VeriFone, didn’t immediately return a request for comment. Representatives for Fujitsu couldn’t immediately be reached outside of regular business hours in Tokyo, where the company is based.
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