Despite strong revenue growth and a narrowing loss in its fiscal third quarter, VeriFone Holdings Inc. failed to meet its own forecast and changed the way it presented its guidance, leading to a steep drop in its share price.

The San Jose terminal company reported Tuesday that revenue for the quarter, which ended July 31, rose 12% from a year earlier, to $258.7 million, exceeding the projection of $256 million to $258 million it made last month.

Its net loss shrank 83%, to $7.2 million, but exceeded its forecast of $3.8 million to $4.5 million.

VeriFone also changed the way it offers guidance, to include depreciation charges and other expenses, which made it seem as if the company was reducing its forecast.

It said that under the new formula, it expects to earn 33 to 36 cents a share in the current quarter; last month is said it expected 36 to 39 cents.

The news drove VeriFone's shares down. They closed Wednesday at $19.07, down 3.2% from Tuesday's close. On Wednesday morning they were trading as low as $17.11.

"They changed the basis by which they reported" guidance figures, "so it looks like they missed and reduced guidance, but they didn't," Gil Luria, an analyst at Wedbush Morgan Securities, said in an interview. "They actually reported what they said they would," but "the stock went down a lot because it looked like they were reducing their guidance."

Douglas Bergeron, VeriFone's chairman and chief executive, said he expects the Payment Card Industry data security standard to help his company increase sales in the coming quarters. The standard is prompting many upgrades in payment systems.

"There is no doubt that VeriFone has benefited from the natural upgrade cycle that this has and continues to provide," he said. "We believe that a major theme of our growth through the next decade revolves around VeriFone's expertise in data security."

Mr. Bergeron also said his company's encryption capabilities can improve merchant security beyond the PCI requirements. Its VeriShield, for example, encrypts data at the point of sale and keeps it encrypted until it leaves the retailer's network. "Though PCI compliance is a big step, we believe the next step is to totally rid retail enterprises and retail networks of usable credit card data."

This holds particular appeal in the grocery and mass merchandise markets, which "understand the importance of protecting their customers and their brands from credit and debit breaches," he said.

VeriFone is also expanding its efforts to sell payment systems abroad, he said; it sells parking lot payment systems in China and payment terminals to transit systems in Turkey and Argentina.

On Wednesday, VeriFone announced that it had created an Integrated Systems Group for Latin America to sell its payment processing systems there.

Mr. Bergeron said his company has moved beyond its recent accounting problems. Last month it restated its fiscal 2007 results, clearing up errors it discovered in December.

Last week VeriFone hired Robert Dykes as its chief financial officer. He succeeded Clinton Knowles, who stepped in as the interim CFO after Barry Zwarenstein left last month. Mr. Zwarenstein said in April that he would leave once VeriFone's earnings were restated.

Mr. Luria said last month that VeriFone's guidance was "ambitious" but "not impossible." In a research note published Wednesday, he did not change that view.

"VeriFone has an opportunity to significantly improve its recent performance over the next few quarters," he wrote. "However, given current levels of growth and profitability, we believe VeriFone's guidance for 2009 appears ambitious."

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