VeriFone Holdings Inc. (NYSE: PAY) saw shares crushed on the debut of 2008 as the company issued a year-end statement noting that its ongoing restatement process will cause a delay in its annual report. Shares closed out 2007 at $23.25, so even with a very weak stock market the drop down to $19.81 you can’t exactly blame this on other issues. The sad part is that this likely isn’t the end of it.
Back on December 3, 2007 after this saw its worst one day drop ever, 247WallSt.Com noted "We caution against believing that these huge drops are immediate buying opportunities because these historically only pop a bit before drifting lower." Shares opened under $30 that day and then fell to $25.50 early that day. They are now under $20.00.
Even a 46% drop doesn’t make something cheap when the problems are still heading its way, and that holds true even with another 20% peeled off since then. Until you have a clear picture of just how bad these restatements are and until you can see the real picture the old highs are irrelevant. This is what happens when investors cannot use the balance sheet and cannot use the income statement to glimmer anything finite.
The beatings are likely to continue, maybe even after morale improves.
Jon C. Ogg
January 3, 2008
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