VeriFone (NYSE:PAY) is seeing shares crushed today after the company issued a release stating that it was going to restate financial results and quarterly financial statements for 2007. This is due to errors in accounting related to the valuation of in-transit inventory and its allocation of manufacturing and distribution overhead to inventory that affects the cost of revenues.
Its revenue forecast for Q4 actually looks above plan, but the results are being delayed and no one wants to trust a company that restates recent results.
It is under a planned share sale under a 10b5-1 plan, but the CEO sold 43,300 shares just last week and that will bring additional criticism over the timing of this news. This will draw additional fire today.
This seems to be the worst drop in the share price in memory. “Accounting irregularities” and “sudden financial restatements” are never good things to hear. We caution against believing that these huge drops are immediate buying opportunities because these historically only pop a bit before drifting lower. That being said, we do expect that some who have been waiting for a chance to buy the stock after its huge run since early 2005 may have a hard time resisting the decision to buy shares.
VeriFone shares opened down huge at just under $30.00, and now shares are down 46% at $25.50 in early trading. Morgan Keegan was the first of the firms to downgrade this almost 60 days ago, but you can expect the other analysts may have to bail on backing a company after a blunder like this. VeriFone makes the credit and debit card transaction swipe machines you use at the grocery store and elsewhere.
Jon C. Ogg
December 3, 2007
Sponsored: Find a Qualified Financial Advisor
Finding a qualified financial advisor doesn’t have to be hard. SmartAsset’s free tool matches you with up to 3 fiduciary financial advisors in your area in 5 minutes. Each advisor has been vetted by SmartAsset and is held to a fiduciary standard to act in your best interests. If you’re ready to be matched with local advisors that can help you achieve your financial goals, get started now.
Thank you for reading! Have some feedback for us?
Contact the 24/7 Wall St. editorial team.