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This article appears in the June 11, 2009, edition of ISO&Agent Weekly.
More merchant customers of VeriFone Holdings Inc. are choosing more basic terminal products over premium offerings, a trend VeriFone CEO Douglas Bergeron characterized "as the rice-and-beans purchasing behavior" of the terminal maker's customers. Bergeron made his comments last week during a conference call with analysts.
"We are seeing a movement from premium wireless" products to landline products, said Bergeron. Within the landline products, VeriFone is seeing "a movement from fully featured to single-application" products, he said.
"These shifts are negative for us, as they have compressed revenue and margins somewhat this year," Bergeron said.
With the exception of Tier 1 merchants, which place compliance with the Payment Card Industry data-security standards as a paramount priority, "our customers throughout the world continue to adjust to the new economic realities," said Bergeron.
Tier 1, or Level 1, merchants process more than 6 million payment card transactions per year.
Many merchants must update their point-of-sale terminals to comply with the PCI standards.
VeriFone last week reported net income of $18.6 million for its fiscal second quarter ended April 30. The San Jose, Calif.-based payment-terminal maker reported a net loss of $17.9 million during the same three-month period a year ago, which the company attributed, in part, to the costs of a financial audit, a restatement of earnings and the costs of defending itself against shareholder lawsuits.
Net revenue for the most recent period reached $201.6 million, a 13.5% decrease from $233 million.
"We believe it is still too early to predict when VeriFone's revenue will rebound, but we do believe we may have seen a bottoming in some of the international markets where VeriFone's business is heavily dependent," Bergeron said.
Net revenue from VeriFone's North America business reached $83.4 million, down 16.5% from $99.9 million.
The company's net revenue for its international business decreased 11.2%, to $118.2 million from $133.1 million. Of the international markets, Europe experienced the largest revenue decrease, 15.9%, to $63.8 million from $75.9 million. Asia followed closely, down 15.1%, to $14.1 million from $16.6 million. Net revenue in the Latin America market fell 1%, to $40.3 million from $40.7 million.
