VeriFone mulling shake-up after fiscal 1Q letdown

VeriFone CEO describes fiscal 1st-quarter woes as 'self-inflicted,' promises changes ahead

Associated Press

SAN JOSE, Calif. (AP) -- VeriFone Systems Inc., a leading maker of terminals for electronic payments, is mulling a possible management shake-up to address the problems that turned its latest quarter into a wake-up call.

The fiscal first-quarter earnings announced Tuesday matched analyst projections that were dramatically lowered nearly two weeks ago after the company provided a preliminary look at results that fell well below a forecast that the company issued in December.

"We are likely to take additional steps as needed, including senior management changes, to ensure that we have the right executive team and resources in place to execute our strategic plan going forward," VeriFone CEO Douglas Bergeron said in a Tuesday statement.

In a conference call with analysts, Bergeron said much of the company's misery was "self-inflicted." He said VeriFone hadn't spent enough time and money tailoring its products to suit the needs of local merchants. He also cited poor execution by its sales staff. He vowed to addresses the weakness within the next eight months so VeriFone will be in better shape heading into its next fiscal year that begins Nov. 1.

The tough talk apparently pleased investors. VeriFone's stock rose 40 cents, or 2 percent, to $19.65 in extended trading. The shares are nearly 40 percent below where they stood before VeriFone warned the quarter would be a disillusioning letdown.

The company, which is based in San Jose, Calif., already has hired a new chief financial officer. Marc Rothman took the CFO job last month after leaving the same post at cellphone maker Motorola Mobility Holdings, which was acquired last year by Google Inc. for $12.4 billion.

VeriFone earned $11.8 million, or 11 cents per share, for the three months ending in January. That contrasted with a loss of $3.1 million, or 3 cents per share, at the same time last year.

If not for certain accounting items, VeriFone said it would have earned 51 cents per share. That figure mirrored the average estimate among analysts polled by FactSet.

Revenue edged up by 2 percent from last year to $429 million, about $2 million below analyst forecasts.

Besides VeriFone's own internal headaches, Bergeron said the company was hurt by weak economy in Europe and the unexpected loss of a five-year contract to process electronic payments for taxis in the Washington D.C. area. He said VeriFone is pursuing legal action to regain that contract.

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