IMGCAP(1)]
Point-of-sale terminal maker VeriFone Holdings Inc. yesterday afternoon reported a profit of $21.9 million for its fiscal third quarter ended July 31, a $29.1 million reversal from a $7.2 million loss for the same quarter a year ago. Revenue, however, was down 18.4%, to $211.2 million from $258.7 million. VeriFone products have been in particularly high demand in China, company CEO Douglas G. Bergeron told analysts during a conference call Tuesday. VeriFone has been migrating customers to its Vx product line from Lipman's Nurit product line, Bergeron noted. VeriFone bought rival terminal maker Lipman Electronic Engineering Ltd. in 2006. "Fulfilling customer demand with the Nurit product, one of the few electronic products imported into China, had created a cost-structure disadvantage, which has now been removed," Bergeron said. Other regions outside of the United States also saw varying degrees of demand growth, Bergeron said, citing as examples contracts won with a United Kingdom-based acquirer and with Oi Paggo, a unit of Brazil-based telecommunication firm Oi, for a mobile-payment service. Demand for VeriFone terminals also grew in Canada, which is migrating to chip-and-PIN from magnetic stripe cards, Bergeron said. Though demand improved, VeriFone experienced improved revenue growth only in Asia. Revenue in that region grew 23.6% for the quarter, to $24.6 million from $19.9 million a year ago. Revenue in the United States and Canada decreased 8.8%, to $88.9 million from $97.5 million. Europe revenues also declined, by 17.1%, to $67.1 million from $80.9 million. Latin America revenue totaled $30.6 million, down 49.3% from $60.4 million. Sales to one of the two major Brazilian acquirers, which together accounted 60% of VeriFone's business in the region in 2008, fell because of a delay completing application software, Bergeron said. Improved gross margins for the San Jose, Calif.-based company contributed to the positive results, says Robert Dodd, senior analyst at Morgan Keegan & Co., a Memphis, Tenn.-based regional investment firm. "In the prior two quarters, VeriFone had significant charges to get rid of obsolete products and eliminate excess components," Dodd tells CardLine sister publication ISO&Agent Weekly. "The costs to do that dropped significantly in this quarter." The third-quarter charge was about $1 million. The first-quarter charge was approximately $12 million, and the second-quarter charge was $9 million, Dodd says.
