VeriFone Systems (
is a provider of technology for electronic payment transactions
and value-added services at the point of sale. Its customers are
primarily global financial institutions, payment processors,
petroleum companies, large retailers, government organizations
and healthcare companies, as well as independent sales
Disappointing Results and Management Guidance
PAY reported the financial results for Q4 of the fiscal year
ended October 31, 2013 on December 17, 2013. Net income for the
quarter came in at $0.27 per share, compared to $0.76 per share a
year ago. After including stock based compensation, the
earnings were $0.13 per share, substantially short of the Zacks
Consensus Estimate of $0.18 per share.
Gross margin contracted 310 basis points from the previous-year
quarter and operating profit declined 70.4% mainly due to 11.5%
year-over-year decline in revenues and 28.1% increase in
The management expects non-GAAP revenues to be in the range of
$425.0 million-$430.0 million for the first quarter of fiscal
2014, almost unchanged from $429.0 million reported in the
Management expects first-quarter non-GAAP earnings to be $0.26
cents per share, down from $0.40 per share in the year-ago
Due to disappointing results and uninspiring guidance, quarterly
and annual estimates have been revised sharply downwards in the
past few weeks by analysts.
Zacks Consensus Estimates for the current quarter and the fiscal
year now stand at $0.18 per share and $1.01 per share, down from
$0.25 per share and $1.27 per share, 30 days ago.
Declining estimates sent PAY to a Zacks Rank # 5 (Strong Sell) on
December 21, 2013.
Investors looking for plays on the Financial Transactions
industry could consider
Qiwi plc (QIWI)
, which has a Zacks rank of 1 (Strong Buy) and an "Outperform"
PAY's top-line growth has continued to decline in 2013 and is
expected to remain under pressure over the next 12 months.
According to Zacks Equity Research "this is primarily due
to the problems related to the distribution channel in the
Middle-East and sub-Sahara region, delay in completing
certification of products in important markets such as Brazil,
lack of new products in the near term, and increasing
Some of the recent steps taken by the company to streamline the
business and appointment of a new CEO may bear fruit in the
longer term but the near-term concerns may keep the stock under
pressure for the time being.
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