VeriFone (PAY) Sued After Changing Revenue Recognition policy; Falling Short of Analyst Estimates

By on April 2, 2013

VeriFone Systems (NYSE: PAY) is being sued in the United States District Court for the Northern District of California by a shareholder who claims the electronic payment processor misled investors by issuing false and misleading statements between December 14, 2011 and February 19, 2013.

On February 20, VeriFone announced that it anticipated first quarter adjusted earnings to be between $0.47 to $0.57 per share on revenue of $424 million – below the analyst consensus of a profit of $0.73 per share on revenue of $492 million.  VeriFone attributed the miss to a slowdown in its European segment, however analysts said its competitors did not experience the same setbacks.

VeriFone also revealed a new revenue recognition policy which prevented it from recognizing that quarter’s revenues from distributors in the Middle East and Africa.

In reaction to the news, shares of VeriFone fell 42.8% to close at $18.24 per share on February 21.

If you purchased shares of VeriFone between December 14, 2011 and February 19, 2013., you may file a motion with the court no later than May 6, 2013, and request that the court appoint you as lead plaintiff.  A lead plaintiff is a representative party acting on behalf of other class members in directing the litigation.  To be appointed lead plaintiff, the court must decide that your claim is typical of the claims of other class members and that you will adequately represent the class.  Your share in any recovery will not be enhanced or diminished by your decision of whether or not to serve as a lead plaintiff.  You can recover as an absent class member without moving for lead plaintiff.  The action discussed here was not filed by Milberg.

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