Verifone shares nearly halve in value after profit warning
Feb 21 (Reuters) - Shares of credit card swipe machine maker VeriFone Systems Inc nearly halved in value after the company warned that a wave of problems including delayed orders would slash its quarterly profit and that it faced more weakness ahead.
Verifone shares slid to $19.43, their lowest in nearly three years, on Thursday and at least seven analysts downgraded their targets on the stock, with Deutsche Bank saying the firm had finally admitted it had failed to execute on its plans.
Deutsche, which rates the stock a "sell", slashed its price target to $15 from $27. The brokerage said past acquisitions had masked what was happening at the company and that it had long been wary of its "aggressive accounting recognition."
"The recent CFO retirement/resignation and the first-quarter revenue recognition requirements could also suggest accounting red flags in prior quarters," Deutsche said, noting the latest quarter's accounts had been signed off by the new chief financial officer.
Verifone attributed its lower-than-expected first quarter estimates to weakness in Europe, lower-than-expected revenue from large customers in Brazil, delayed customer spending on major projects, and the cancellation of a Washington, D.C. taxi project.
Until the latest quarter, Verifone had met or beaten analysts' quarterly estimates for two years, and analysts on Thursday rejected the company's argument that its problems came from the weak economy.
While macro conditions may have had an impact on business, the global economy has had far less of an impact on peers such as NCR Corp and Micros Systems, said Wedbush analyst Gil Luria, who cut his price target to $22 from $33.
Verifone warned late on Wednesday that it expected its first quarter adjusted earnings to be 47 to 50 cents per share in the first quarter on revenue of $424 million to $428 million. That is well short of the average analyst profit forecast of 73 cents per share on revenue of $492 million.
The company forecast an adjusted profit of 45 to 50 cents per share in the current quarter, well below the average analyst forecast of 80 cents, according to Thomson Reuters I/B/E/S.
Verifone shares were down 38 percent at $19.81 at mid-morning on the New York Stock Exchange on Thursday.
The company is scheduled to formally report first-quarter results on March 5.
(Reporting by Sruthi Ramakrishnan; Editing by Rodney Joyce and Ted Kerr)
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