Feb 21 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
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
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
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