Point-of-sale terminal maker Hypercom Corp. this week reported a $624,000 fourth quarter profit, marking the Scottsdale, Ariz.-based company’s third consecutive profitable quarter. Hypercom reported a $74.8 million loss for the fourth quarter of 2008.
Revenue totaled $117.4 million, down 2.6% from $120.5 million during the same period in 2008. Revenue was lower because the company ended a low-margin service contract in Brazil last year, and product revenue from the Americas and Southern Europe was lower than in the same quarter a year earlier, Hypercom says.
Hypercom also improved its annual performance, reporting a $6.9 million loss that compares with an $85.4 million loss in 2008. Annual revenue fell 6.3%, to $406.9 million from $434.2 million.
The numbers may have improved, but Philippe Tartavull, Hypercom CEO and president, sees much work ahead for the company in 2010. While not denying 2009 was a strenuous year for Hypercom, Tartavull told analysts during a conference call yesterday, “We see some good momentum at the beginning of this year.”
Specifically, Hypercom has identified market segments it is not in yet, Tartavull says. “We’re going to spend a lot of focus and time to make sure that we capitalize on those opportunities,” he says.
For example, Hypercom says it has re-entered the Brazilian terminal business, which is not the same as the service contract it halted last year. Three merchant acquirers in Brazil have certified Hypercom’s products, the company says.
2010 Potential
But Tartavull sees the United States as having “a greater potential for us in 2010.”
“We already see stronger activity than last year, and we believe we can add market share by developing verticals where we do not have a significant presence today,” he says. Hypercom would not disclose what these verticals are “because we are not going to tip our hand to the competition,” a spokesperson says.
Tartavull also expects Hypercom to release the first product made under the company’s “joint development manufacturing” model in the second quarter, with others to be introduced in the following quarters. In November, Hypercom announced a move away from its contract-manufacturing model to one where it supplies the design to the manufacturer, which selects the components necessary to build the device. Hypercom would not name the manufacturer.
Hypercom’s efforts appear to please Gil Luria, vice president of equity research at Wedbush Securities Inc., a Los Angeles-based equity research firm. In a research note, Luria says he believes “Hypercom is on its way to sustained and improving profitability.”
Luria expects Hypercom to see low-double-digit revenue growth in 2010 and the company gaining market share in Europe, the United States and Brazil.
