VeriFone shares soar 35 pct on upbeat outlook

SAN JOSE, Calif.—VeriFone Holdings Inc.'s shares soared more than 35 percent late Tuesday after the maker of payment processing equipment provided a rosy outlook and cleaned up an accounting mess that had cast a pall over the company.

The bright picture painted by VeriFone's management provided a ray of hope for investors after months of anxiety triggered by financial misstatements currently under investigation by the Securities and Exchange Commission.

VeriFone shares climbed $5.26, or 35.7 percent, in extended trading after finishing the regular session at $14.73, down 95 cents.

Even if the rally extends into Wednesday's trading, VeriFone's stock is likely to remain below its 52-week high of $50 reached last October, shortly before management announced that it had improperly inflated its profits during the first three quarters of fiscal 2007.

The imbroglio prompted VeriFone to replace its chief financial officer, Barry Zwarenstein.

VeriFone on Tuesday named Clinton Knowles as interim CFO.

After launching an internal inquiry late last year, VeriFone finally quantified the scope of its financial bungling in SEC filings Tuesday. The San Jose-based company wiped out a total of $70 million in previously reported 2007 profits to correct its books.

The problems were caused by how VeriFone accounted for some of its inventory.

Besides amending its 2007 results, Verifone also disclosed that it lost $51.5 million, or 61 cents per share, during the first half of its fiscal 2008. That compared with a loss of $10.5 million, or 13 cents per share, at the same time in the previous year, according to Tuesday's SEC filings.

Revenue for the first half of fiscal 2008 totaled $418.5 million, a 3 percent drop from the prior year.

But VeriFone indicated that the worst may now be behind the company, which is best known for point-of-sale terminals used to process credit and debit card transactions.

Excluding expenses for its restatement and other one-time times, VeriFone said it would earn 34 or 35 cents per share for the quarter that just ended in July. Analysts, on average, had projected 28 cents per share, according to Thomson Reuters.

VeriFone expects revenue for the period to range from $256 million to $258 million -- $7 million to $9 million above analyst estimates.

In the final quarter of the fiscal year, VeriFone expects its earnings to range from 36 cents to 39 cents per share, excluding certain costs unrelated to its ongoing business. Analysts had forecast earnings of 30 cents per share for the August-October period.