Analysts and the stock market reacted positively to VeriFone Holdings Inc.'s fiscal third-quarter results released Tuesday. In trading early this morning, the payment-terminal maker's shares were selling at $13.98, a 25.6% increase compared with yesterday's closing price of $11.13. Overall, analysts generally were pleased with VeriFone's results. "Revenues were modestly better than estimates and, more importantly, gross margins were well better," says George Sutton, senior research analyst at Minneapolis-based Craig-Hallum Capital Group LLC. "VeriFone called the most recent quarter as the bottom in the market, consistent with what the other vendors have also been suggesting." Calling the results encouraging, Gil Luria, an analyst with Wedbush Morgan Securities in Los Angeles, says management's outlook also improved, and "they even think they can grow 10% in their next fiscal year." VeriFone also announced Tuesday it had reached a settlement with the U.S. Securities and Exchange Commission's inquiry into the company's 2007 restated results. In December of that year, VeriFone said it was restating its revenues for the first three quarters of 2007 because of an accounting error (CardLine, 12/3/07), which the company eventually resolved (CardLine, 8/20/08). "The SEC's complaint recognizes that the company's restatement resulted principally from incorrect inventory accounting adjustments made by a former employee but does not accuse the company of intending to misstate its financial results or to mislead anyone," a VeriFone statement reads. "Without admitting or denying the SEC's allegations, VeriFone has agreed to a permanent injunction against future violations of certain reporting, books and records, and internal accounting-control provisions of the federal securities laws." No other charge or monetary penalty was assessed against VeriFone, which it says cooperated with the commission's investigation. This settlement is subject to court approval.

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