Hypercom Corp. is poised to roll out its first payment terminal produced under the joint-development manufacturing business model it announced last November.
Philippe Tartavull, the Scottsdale, Ariz., company's chief executive and president, said the terminal will be available this summer and that the company expects to release a new point of sale product under the new system each quarter.
Hypercom has had "overwhelming positive feedback from a solid group of customers that have previewed the first of our next-generation products," Tartavull said last week during an earnings conference call.
Hypercom has historically used contract manufacturing partners to produce its payment terminals. In November it said it would shift to a new manufacturing partner that would help it select components for the products and make other contributions to the design process.
(Hypercom has not named the new manufacturing partner.)
Analysts said the shift could help Hypercom better compete with its larger terminal competitors VeriFone Holdings Inc. and Ingenico SA.
VeriFone wants "to close the gap between themselves, VeriFone and Ingenico," and "the joint-development manufacturing model is one way they can do that," said Gil Luria, a vice president of equity research at Wedbush Securities Inc. in Los Angeles. "One of the key 'secret sauces' VeriFone and Ingenico have had over the years is the ability to quickly enter a market."
George Sutton, a senior research analyst at the Minneapolis investment firm Craig-Hallum Capital Group LLC, said the joint-development "capability should result in products that more closely align with customer product desires, a shorter window to processor certifications and a lower ultimate cost structure. It is this generation which should enable the company to achieve margins more in line with industry averages."
Sutton is eager to see the new terminal products. "This is really the next big effort for Hypercom," he said. "It positions them to potentially to be able to leapfrog some of the product families out there."
Tartavull said that domestic demand for payment terminals could increase this year. "We believe that North America represents a growth opportunity," he said.
First-quarter revenue at Hypercom increased in every global region except North America. It said the decline was due in part to a large contract in Brazil that it exited last year.
Luria agreed that Hypercom's sales could pick up in the United States and that the new terminals could help it capture more market share.
"In the last decade, Hypercom suffered from market share losses to VeriFone and Ingenico," he said. "In the last couple of years, they've reversed that. Hypercom is at least holding its own if not gaining share."
