(Reuters) - VeriFone Systems Inc (PAY.N), a maker of credit card swipe machines, forecast current-quarter results well below expectations and analysts suggested that the company is losing customers to its rivals.
The company’s shares were down about 16 percent at $18.38 in extended trading.
VeriFone forecast third-quarter adjusted earnings of 20 cents per share on revenue of $400 million.
Analysts were expecting adjusted earnings of 50 cents per share on revenue of $460.5 million, according to Thomson Reuters I/B/E/S.
VeriFone might have been aggressively shifting to services from hardware sales and the management took its eye off the ball in terms of product evolution, allowing rivals such as Ingenico SA (INGC.PA) to take market share, analysts said.
“The challenge the company has is the fact they don’t have the right products at the right places at the right time,” Northcoast Research analyst Keith Housum said.
The company has not invested in its research and development in a timely fashion, so if they don’t have a product their competitors do, the rivals get the sale, he said.
VeriFone, which also competes with Radiant Systems Inc and NCR Corp (NCR.N), said research and development expense rose 10 percent to $41.6 million in the second quarter from a year earlier.
The company, which sells payments equipment to shops and restaurants, has been seeking to move more to a service model for its systems.
VeriFone has been searching for a CEO since March, when Douglas Bergeron stepped down after 12 years at the helm. The company also named a new chief financial officer in February.
The net loss attributable to the company was $58.4 million, or 54 cents per share, in the second quarter, compared with a profit of $3.5 million, or 3 cents per share, a year earlier. Excluding items, the company earned 42 cents per share.
Revenue fell 10 percent to $426.3 million.
Analysts had expected earnings of 47 cents per share on revenue of $440.3 million, according to Thomson Reuters I/B/E/S.
Shares in the San Jose, California-based company have fallen about 5 percent since the CEO quit. They closed at $21.95 on Wednesday on the New York Stock Exchange.
Reporting By Lehar Maan and Chandni Doulatramani in Bangalore