Hypercom Corp. in the coming weeks will announce the first point-of-sale terminal produced under the company’s “joint development manufacturing model.” It plans to make the terminal available for sale later this summer, a spokesperson tells PaymentsSource.
Hypercom executives discussed the new terminal during a May 5 conference call with analysts to discuss first quarter earnings.
Announced in November, the new production model differs from the contract-manufacturing system the Scottsdale, Ariz.-based terminal maker historically has used because the partner company will help pick components for the devices. Hypercom would not name the company making the products.
Hypercom expects to release a new product built using the new system each quarter following the initial terminal launch, Philippe Tartavull, Hypercom CEO and president, told analysts. “We are extremely pleased with the overwhelming positive feedback from a solid group of customers that have previewed the first of our next generation products,” Tartavull said.
Analysts similarly are anticipating the terminal’s arrival.
“As they look to close the gaps between themselves, VeriFone and Ingenico, the joint development manufacturing model is one way they can do that,” Gil Luria, vice president of equity research at Wedbush Securities Inc., a Los Angeles-based equity research firm, tells PaymentsSource. “One of the key ‘secret sauces’ VeriFone and Ingenico have had over the years is the ability to quickly enter a market,” he says.
VeriFone Holdings Inc. and Ingenico S.A. have been able to translate innovation into products, Luria says. “That’s something that Hypercom can do better,” he says.
Indeed, Hypercom should receive a boost from products it releases under the new manufacturing model, predicts George Sutton, senior research analyst at Craig-Hallum Capital Group LLC, a Minneapolis-based investment firm.
“The [joint development manufacturing] capability should result in products that more closely align with customer product desires, a shorter window to processor certifications and a lower ultimate cost structure,” Sutton tells PaymentsSource. “It is this generation which should enable the company to achieve margins more in line with industry averages.”
Sutton is eager to see the new products. “This is really the next big effort for Hypercom,” he says. “It positions [the company] to potentially to be able to leapfrog some of the product families out there.”
Hypercom also reported its fourth consecutive profitable quarter (see story).
Though revenue in North America was down, Tartavull says the market appears to have stabilized. “We believe that North America represents a growth opportunity of the year,” he said.
Luria said his payments-industry contacts echo that sentiment, and Sutton was impressed with the results for the quarter.
“As a long-term follower of the company, perhaps we are more excited than the casual observer to see another solid quarter and an outlook that feels relatively confident and relatively predictable,” Sutton says.
Hypercom’s results also may be indicative of market share gains, Luria says. “In the last decade, Hypercom suffered from market share losses to VeriFone and Ingenico,” he says. “In the last couple of years, they’ve reversed that. Hypercom is at least holding its own if not gaining share.”
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