Verifone's Efforts Pay Off
Verifone (NYS: PAY) , the secure electronic payment solutions company, declared a great set of fourth-quarter results that exceeded analyst expectations. Let's take a closer, Foolish look at how Verifone's moves paid off.
Paving its way to success
The San Jose, Calif.-based company witnessed an exciting fourth quarter as profits nearly quadrupled from the year-ago period to $198.8 million. The huge jump in profits was mainly due to an income tax benefit that the company enjoyed to the tune of $205.1 million and 50% higher revenues of $410.7 million. However, if you exclude extraordinary items like the income tax benefit, the company's profits still rose by 57.9% to $57 million from the previous year's adjusted fourth-quarter profit.
Verifone's business has been booming across most geographical regions. In complete defiance of the European debt crises, the company's combined revenue from Europe, Middle East, and Africa more than doubled from the year-ago quarter to $148.6 million. Verifone's Latin American operations also saw revenues zoom 94.1% to 104.6 million, while Asia saw 40.3% higher revenues. However, revenues from Canada declined by 5.3% to $115.7 million.
Spreading its wings
Verifone's fourth quarter was certainly quite busy with two acquisitions under its belt. In November, Verifone announced its acquisition of Global Bay Mobile Technologies, a provider of next-generation mobile retail solutions. The company said that the acquisition would enhance Verifone's initiatives to bring the smartphone- and tablet-based shopping and payment experience to retail businesses. This would certainly be helpful, especially at a time when smartphones and tablets like the Apple iPhone and iPad are the craze.
Besides that, back in August, the company finalized its acquisition of Hypercom, a manufacturer of point-of-sale terminals. The company said that the acquisition of Hypercom would complement its business and Verifone would try to enhance all of Hypercom's product lines under the Verifone brand itself.
Come rain or shine...
The company was also busy lapping up key partnerships during the quarter. For example, Verifone entered into a partnership with Visa (NYS: V) to increase installations of in-taxi payment and media systems in London before the Olympic games in 2012. The deal has led to the signing up of nearly 7,000 cabs for a five-year agreement. Verifone anticipates installation of 10,000 credit card terminals before the commencement of the Olympics.
Verifone's strategic relationship with Google (NAS: GOOG) also bore fruit during the quarter, as the Google Wallet mobile payment system now boasts approximately 40,000 Verifone retail lanes across the country with NFC capability. NFC, or near-field communication, is a feature present mainly in the latest range of smartphones that can be used for making payments instead of using the traditional swipe of a credit card. The company is also in talks with Verizon (NYS: VZ) , AT&T (NYS: T) , and T-Mobile's joint venture, Isis, along with Paypal for plans slated for 2012.
The Foolish bottom line
Verifone seems to be making all the right moves with its partnerships and acquisitions. Going forward, I feel that Verifone stands to gain immensely through its ongoing partnerships, which would continue to boost the company's top-line growth. So what do you Fools think of Verifone? Leave your comments in the box below. Also, don't forget to stay up to speed with Verifone's latest money-spinning deals by adding it to your very own watchlist. It's free and lets you stay on top of the latest news and analysis for your favorite companies.
Keki Fatakia does not hold shares in any of the companies mentioned in this article. The Motley Fool owns shares of Google.Motley Fool newsletter serviceshave recommended buying shares of Visa and Google. Try any of our Foolish newsletter servicesfree for 30 days. We Fools may not all hold the same opinions, but we all believe thatconsidering a diverse range of insightsmakes us better investors. The Motley Fool has adisclosure policy.
At the time this article was published
Copyright © 1995 - 2011 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.