) plunged 42.8% ($13.65) to close at $18.24 on the heels of a
dismal preliminary first quarter 2013 result. VeriFone expects to
report GAAP earnings per share ("EPS") in the range of 7 cents to
Excluding stock-based compensation, amortization charges,
acquisition related charges and related tax effect, VeriFone
expects EPS to be in the range of 47 cents to 50 cents, well
short of its previously guided range of 70 cents to 73 cents.
However, EPS is likely to decline or remain flat from 50 cents
reported in the year-ago quarter. Sequentially, it is expected to
decline significantly from 66 cents reported in the previous
VeriFone expects first quarter revenues to be in the range of
$424.0 million to $428.0 million on a GAAP basis. Excluding
amortization of step-down in deferred revenues on acquisition,
revenues are expected to be in the range of $425.0 million to
$430.0 million, much lower than the initial guided range of
$495.0 million to $500.0 million.
Revenues are expected to miss the Zacks Consensus Estimate of
$493.0 million, primarily due to continued weak macro economic
conditions in Europe, lower-than- anticipated revenues from
certain Brazilian customers, political turmoil in Venezuela
(usually a strong market for VeriFone), postponement and delay of
certain projects and the cancellation of Washington D.C. taxi
Revenues were also negatively impacted by VeriFone's increased
focus on long-term service initiatives in multiple regions, which
hurt near-term hardware and software features. Increase in
deferred revenues due to higher volume shipments to a new mix of
customers in the Middle East and Africa, which did not meet first
quarter revenue recognition criteria, also hurt top-line
However, revenues are expected to increase slightly from
$420.0 million reported in the year-ago quarter. Revenues are
projected to decline significantly from $485.0 million reported
in the previous quarter.
We note that VeriFone has outperformed the Zacks Consensus
Estimate by an average of 3.5% over the trailing four quarters.
Earnings estimates have been more or less static in the last 90
days with no movement on either side. Currently, the Zacks
Consensus Estimate is pegged at 64 cents per share for the first
VeriFone announced a number of steps to boost its operating
results going forward. The steps include a comprehensive review
of the strategic operating plan to boost near-term productivity
along with increasing service offerings over the long term.
VeriFone expects to take steps to improve cost efficiencies of
the acquisitions. However, it also expects an increase in
research & development spending in order to offer more
frequently products that have significant demand in 2013.
Despite the imminent first quarter miss, we believe that these
initiatives will drive VeriFone's results going forward.
Moreover, VeriFone's accretive acquisitions are expected to boost
customer base going forward.
However, competition continues to be stiff from the likes of
) and is a major headwind. Organic growth also remains a matter
of concern amid volatile macro economic conditions.
Currently, VeriFone has a Zacks Rank #3 (Hold).
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