- 2015 gross margin, 2016 predictions beat analysts' views
- Moving away from SIM only, CEO Piou has diversified company
Gemalto NVadvanced the most in more than seven years after the software company said it expects rising profitability in 2016 as it sells more secure products for bank transactions and electronic documents.
The company’s gross margin is expected to rise by more than 1.5 percentage points this year, Amsterdam-based Gemalto said in a statement on Friday. That would mean the percentage of sales left after deducting costs would rise to at least 40.5 percent, compared with the average analyst estimate of 39.7 percent, according to Bloomberg data.
Friday’s stock price increase of as much as 13 percent provides support for Chief Executive Officer Olivier Piou, who has diversified Gemalto’s activities away from selling only low-margin SIM cards to more profitable software for bank transfers, secure electronic documents such as passports and wireless communication. Piou’s strategy has attracted and retained clients such as Visa Inc., AT&T Inc., Microsoft Corp. and Boeing Co.
“We’ve invested a lot in the past two years to ramp up in new technology like machine-to-machine and cybersecurity for companies,” Piou said during a call with reporters. Most of the spending is done, the time is now to optimize -- that will help improve our margins.”
The shares were trading 10 percent higher at 64.88 euros at 12 p.m. in Amsterdam, valuing the company at 5.8 billion euros ($6.4 billion).