Gemalto NV (GTO) fell the most in more than three years after Visa Inc., owner of the biggest bank-card network, said it’s offering cheaper alternatives to the company’s technology for payments using mobile phones.
New capabilities include an option to host accounts “in a secure, virtual cloud,” Foster City, California-based Visa said in a statement yesterday. This gives financial institutions more choice in secure payment systems with smartphones and follows the introduction of technology that allows Android phones to emulate a smartcard, so the devices can be used to “wave to pay,” Visa said.
“The outlook for Gemalto’s Mobile Communication segment, which accounts for around 50 percent of its earnings, is the main reason for our sell recommendation,” Ali Farid Khwaja, an analyst at Berenberg Bank, said in a note today. The technology now supported by Visa “is simpler, cheaper and the fact that Visa and Mastercard have approved it also suggests that it is secure to use for payment transactions,” he said.
Gemalto’s offerings include chips and software that make bank cards and mobile phones more secure. Under Chief Executive Officer Olivier Piou, the Amsterdam-based company has shifted away from commoditized chips to sell more lucrative packages including security software. Its clients include mobile-phone carriers and banks, as well as companies including Volkswagen AG’s Audi division and Facebook Inc.
Gemalto fell as much as 9.2 percent, the biggest intraday drop since August 2010. The shares were down 5.3 percent at 78.42 euros as of 11:32 a.m. in Amsterdam, for a decline of 2 percent this year, giving the company a market value of 6.9 billion euros ($9.45 billion).
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