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Hypercom Corp., a Scottsdale, Ariz.-based point-of-sale terminal maker, is set to "achieve parity" among its two top competitors, analyst George Sutton of Craig-Hallum Capital Group LLC asserts in a recent research report. Explaining why he is upgrading Hypercom to "buy" status from an "accumulate" status, Sutton says because of Hypercom's "improvements to its operating model and product design and build capabilities," the company could see "higher margins and profitability" as management focuses operations on larger markets. He cited recent Hypercom news that some payment processors have certified some of the company's terminals for use on their networks and recent large orders (CardLine, 6/26) as evidence of the improvement. Hypercom is poised to benefit the most from the recent consolidation among POS terminal makers that saw San Jose, Calif.-based VeriFone Holdings Inc. buy Lipman Electronic Engineering (CardLine, 11/1/06), Hypercom acquire Thales' e-Transaction unit (CardLine, 2/14/08) and France-based Ingenico S.A. obtain Sagem Monetel, Sutton says. "We acknowledge that Hypercom has historically been the weak number three to the point that VeriFone CEO [Douglas] Bergeron famously declared in late 2007 that the industry was heading towards a "benevolent duopoly." Rather, Sutton says, the three are now on more balanced footing against each other with the result being "firmer market pricing, more rational product cycles and a healthier competitive environment."
