VeriFone shares jump after CEO resigns

VeriFone shares jump after CEO resigns, analysts mixed on how much it will help

Associated Press

NEW YORK (AP) -- Shares of VeriFone Systems Inc., a leading maker of credit-card terminals, climbed Tuesday after it said its CEO was stepping down.

THE SPARK: Late Monday, VeriFone said Douglas Bergeron will leave on Tuesday after 12 years as CEO. He will be temporarily replaced by board chairman Richard McGinn. The San Jose, Calif., company is going to look for a permanent replacement.

Recent stumbles have cut the company's stock price nearly in half. Last month, Verifone warned that earnings for the quarter that ended in January would be far below expectations. In a conference call with analysts, Bergeron 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.

The company replaced its chief financial officer in February.

THE ANALYSIS: Meghna Ladha at Susquehanna Financial Group raised her rating on the stock to "Positive" from "Neutral" on Tuesday morning, saying that while it's unclear if new management can do better, it's unlikely they'll do worse.

In addition, the company should see some boost from the impending upgrade of U.S. payments terminals to the more secure technology used overseas, Ladha said. She raised her price target on the shares from $20 to $25.

Gil Luria at Wedbush was less positive.

"We believe the replacement of the CEO and CFO within the last few weeks make it possible for VeriFone to return to growth. However, we believe the new CEO and new CFO Marc Rothman will need to repair the damage their predecessors have left behind, which could lead to further negative developments for the company and the shares over the next few months/quarters," Luria wrote. He kept a "Neutral" rating on the stock and a $22 price target.

SHARE ACTION: Verifone shares rose $1.05, or 5.1 percent, to $21.51 in midday trading, after earlier spiking as high as $22.18. The shares were trading above $32 before the company's Feb. 20 profit warning.

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