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Point-of-sale terminal maker Hypercom Corp. yesterday reported net income of $625,000 for the third quarter ended Sept. 30, an 18.1% increase from the $529,000 during the same period last year. Revenue grew by 72.6%, to $122.2 million from $70.8 million. Hypercom executives attributed the revenue growth to its acquisition earlier this year of the Thales e-Transactions terminal business (CardLine, 4/11). The former e-Transactions business, which is heavily focused on Europe, generated $45.5 million of the $122.2 million in revenue. Hypercom's legacy business generated the rest, Robert M. Vreeland, Hypercom interim chief financial officer, told analysts during a conference call yesterday. Revenue for the first nine months of 2008 was $319.4 million, a 57.3% increase from $203.1 million revenue during the same period last year. Hypercom posted a $10.6 million net loss for the first three quarters of 2008 compared with a $7.7 million net loss for the same period a year ago. More than $4.4 million in interest expense accounts for a portion of the growth in the loss, according to Hypercom's third-quarter 2008 financial statement. During the third quarter, Scottsdale, Ariz.-based Hypercom says it experienced growth in the Europe, Middle East and Africa region, especially for its multilane products. Sales of countertop and multilane products grew in North America, while networking–product sales grew in the Asia-Pacific region. Hypercom says about 70% of its business comes from outside the United States. George Sutton, senior research analyst at Minneapolis-based Craig-Hallum Capital Group LLC, says in a research report that Hypercom is making progress toward increasing its financial performance, but it still faces challenges. In an industry dominated by three large companies–Hypercom, VeriFone Holdings Inc. and Ingenico S.A.–Hypercom is positioned as the "relatively small number 3," Sutton writes. But Hypercom has begun to regain market share while it gets "smarter" about introducing new products, lowering manufacturing costs for its products and improving the quality of its sales staff, he says.
