VeriFone Cuts Outlook, Announces Plans to Review Business

VeriFone Systems Inc. cut its annual guidance after posting weaker-than-expected results for its latest quarter and announced a strategic review that will likely lead to job cuts.

The payments-technology company didn't give a time frame for its review or an estimate for possible head count reductions. But VeriFone did say that it hopes to achieve about $30 million in savings in 2017.

"We are aggressively executing mitigating actions including a head count restructuring and a review of underperforming businesses," said Paul Galant, chief executive of the company.

Shares of VeriFone slipped about 24% to $21.44 in after-hours trading.

The San Jose, Calif., company—facing increasing competition in the payments business—is in the midst of an effort to transform itself to a payment- and commerce-services company from a vendor of payment terminals.

VeriFone said it now expects $2.1 billion in revenue for the year with earnings on a per-share basis of $1.85. In the first quarter, the company had raised its annual guidance to per-share earnings between $2.21 and $2.24 on revenue of $2.15 billion to $2.17 billion.

Analysts surveyed by Thomson Reuters expected per-share earnings of $2.23 on $2.2 billion in revenue.

For the period ended April 30, VeriFone reported a profit of $2.9 million, or three cents a share, down from $17.6 million, or 15 cents a share, a year earlier. Excluding certain items, per-share earnings rose to 47 cents from 44 cents.

Revenue increased 7.3% to $526 million. Excluding certain items, revenue rose 8.5%.

The company expected per-share profit of 51 cents to 52 cents and revenue of $530 million. Analysts surveyed by Thomson Reuters expected profit of 52 cents on revenue of $530 million.

Systems revenue improved 5.6% to $342.5 million, and services revenue grew 10.9% to $183.8 million.

Revenue in its North America segment increased 8.4% to $209.3 million.

Write to Ezequiel Minaya at [e-mail]

(END) Dow Jones Newswires

June 07, 2016 17:25 ET (21:25 GMT)

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