Herman Miller is engaged in the research, design, manufacture and distribution of office furniture systems, products and related services. Most of these systems and products are designed to be used together. The company’s primary products include furniture systems, seating, storage and material handling solutions, freestanding furniture and case goods. Herman Miller has manufacturing facilities in the U.S., China, Italy, and the U.K supported by a dealer network spanning across 40 countries.

The Michigan-based company posted a 7.0% year-over-year decrease in sales to $329.6 million as its North American segment’s sales dipped 8.9% to $269.5 million, while non-North American division’s revenues reduced by 9.5% to $46.9 million. However, the company witnessed some improvement in orders, which grew by 3.8% year-over-year to $290.0 million.

Herman Miller’s gross margin increased by 190 basis points (bps) to 31.8% primarily due to lower commodity costs coupled with management initiatives to control costs. Operating expenses, as a percentage of sales, increased 190 bps year-over-year to 26.0% mainly due to higher expenses related to the consolidation of healthcare furnisher Nemschoff Inc., which the company acquired in June last year. However, Herman Miller still swung to an operating income of $16.8 million, compared to an operating loss of $2.8 million in the year-ago period, primarily due to improved gross margin and lower expenses related to restructuring.

Herman Miller ended the quarter with cash and equivalents of $123.1 million, compared to $172.4 million in the year-ago quarter, mainly due to outflows related debt retirements and the Nemschoff acquisition. During the quarter, the company generated $8.4 million of cash from operating activities and deployed $3.9 million towards capital expenditure.

Meanwhile, the Zacks Consensus Estimate on Herman Miller’s earnings for the fiscal year ending May 2010 is currently pegged at 81 cents per share, which slipped by a penny in just the past week as 1 of 4 covering analysts lowered expectations. For fiscal 2011, the Zacks Consensus Estimate currently stands at $1.08 per share, which has remained steady over the past 2 months.

Zacks Investment Research

(MLHR) Herman Miller Misses Earnings Expectations

Based in San Jose, California, VeriFone designs, markets and services a transaction automation system that facilitates electronic payments between consumers, merchants and financial institutions.

Revenues of $223.4 million in the first quarter of fiscal 2010 were up 2.6% sequentially and up 4.4% year over year. Earnings per share (EPS) came in at 26 cents, easily beating the Zacks Consensus Estimate of 18 cents.

AGREEMENT IN REVISIONS

Management has also upgraded its guidance. VeriFone now expects revenues between $925 million and $940 million in 2010, up from the previous estimate of $900 million to $945 million. Earnings per share (EPS) are forecasted between $1.00 and $1.10, up from the previous estimate of 97 cents to $1.07.

The increase in guidance has led to estimate revisions by analysts covering the stock. Four out of the five analysts covering PAY have raised their estimates in the last 30 days for fiscal 2010 and one in the last seven days, with no revision in the opposite direction. For fiscal 2011 as well, four out of the five analysts covering the stock raised their estimates in the last 30 days and one in the last seven days with no movement in the opposite direction.

Coming to the second quarter, VeriFone expects revenues between $225 million and $230 million, up 12% – 14% year over year. EPS is projected around 25 – 26 cents.

Three out of the five analysts have raised their estimates for the second quarter in the last 30 days and one in the last seven days with no revision in the last seven days.

MAGNITUDE – INCREASE IN ESTIMATES

The current Zacks Consensus Estimate for fiscal 2010 stands at 92 cents, up one cent in the last seven days, compared to the management’s guidance of $1.00 – $1.10.

VeriFone has consistently met or exceeded its guidance. In terms of earnings surprises, earnings exceeded the Zacks Consensus Estimate in the last quarter by 16.67%, while the fourth quarter met expectations. On average, earnings exceeded the Zacks Consensus Estimate by 26.54%.

For fiscal 2011, estimates are up one cent with the current Zacks Consensus Estimate being $1.13.

For the second quarter, the current Zacks Consensus Estimate is 22 cents compared to the management’s guidance of 25- 26 cents.

PAY SHOULD PAY

With the economy showing signs of recovery, revenue growth should pick up in 2010. The prospect for margin recovery may be attributed to increasing inventory write-downs in the recent quarters, which in turn may lead to higher gross margins in the coming quarters.

VeriFone continues to take strategic steps to expand its business both domestically and internationally. Based on a brighter outlook for 2010, we upgrade our recommendation on VeriFone. Our Outperform recommendation is supported by the Zacks #1 Rank (Strong Buy).

Zacks Investment Research

(PAY) VeriFone Holdings Earnings Scorecard

Management stated that business has begun to recover in both domestic and international markets, and revised its guidance for 2010. VeriFone now sees revenues reaching $925-$940 million in 2010, up from the previous estimate $900-$945 million. EPS is forecasted to be between $1.00 and $1.10, up from the previous estimate of between 97 cents and $1.07.

Based on a brighter outlook for 2010, we upgrade our recommendation on VeriFone to Outperform from Neutral.

Zacks Investment Research

(PAY) VeriFone Holdings Incorporated – Bull of the Day

With an initial capacity to transport up to 2 billion cubic feet per day (Bcf/d) of natural gas, the pipeline will serve the Fayetteville Shale-producing region in Arkansas. This is a 42-inch, approximately 185-mile pipeline.

Energy Transfer Partners is the operator of this pipeline and will manage the construction program. Total project cost is anticipated at $1.25 billion. FEP will start off in Conway County, Arkansas, continue eastward through White County, Arkansas, and terminate at an interconnection with Trunkline Gas Company in Panola County, Mississippi. The pipeline will be operative by the end of this year.

This is not a one-off joint venture initiative with Kinder Morgan Energy Partners. In the middle of last year, ETP and KMP started full operations on the Mid-continent Express Pipeline (MEP). This was also a 50/50 joint venture between the two partnerships. The pipeline provides access for shippers and producers in the Barnett Shale, Bossier Sands and other producing regions to markets in the eastern U.S.

With the largest intrastate system in Texas and expanding interstate assets, Energy Transfer is connected to nearly every natural gas shale play in North America, including the Haynesville, Barnett and Fayetteville shales. The partnership is ideally positioned to benefit from increasing production from unconventional sources of natural gas. Consequently, we upgraded ETP units to Neutral last week.

Zacks Investment Research

(FEP) Energy Transfer Partners L.P. Builds New Pipeline

Company Description

Cardtronics operates over 30,000 ATMs in the U.S., Puerto Rico, the U.K. and Mexico. Additionally, the company works with merchants like 7-Eleven, Costco, CVS, and other major retailers and gas stations.

Rising Revenue

On Feb 11 Cardtronics reported fourth-quarter results that included revenue of $125 million, up 6% since the same period last year. The company also managed to improve its gross margin by 700 bps, to 31%.

Net income came in at just under $7 million, or 17 cents per share. This did fall a penny shy of expectations.

Chairman – “Outstanding Year”

Fred Lummis, Chairman of the Board said “2009 was truly an outstanding year for Cardtronics.” He went on to highlight the record revenue and cash flows, that allowed the company to lower its debt ratios, strengthening the balance sheet.

Solid Growth

After the report, most Cardtronics analysts raised full-year estimates. The Zacks Consensus Estimate for 2010 is up a penny to 77 cents. If met, this would be a growth rate of 40%.

Next year’s projection is also up 1 penny, to 95 cents for a growth rate of 13%.

Valuations

Cardtronics has nice growth projections but remains a good value too. The forward P/E is less than 13 times and shares carry a PEG ratio of 0.9. CATM’s price-to-sales ratio is 0.8 times.

The Chart

The earnings miss sent shares sharply lower, but if you are looking to do some bottom fishing this Zacks Rank #1 stock is a solid candidate. The decline gives Cardtronics great value and the chart looks to be leveling off.

Bill Wilton is the Growth Stock Strategist for Zacks.com. He is also the Editor in charge of the market-beating Zacks Growth Trader service

Zacks Investment Research

(CATM) Cardtronics Incorporated – Solid Growth

Based in San Jose, California, VeriFone designs, markets and services a transaction automation system that facilitates electronic payments between consumers, merchants and financial institutions.

Revenue from international operations increased 2% sequentially. Latin America increased 14% and Europe grew 1% while Asia declined 11%.

Revenues from North America increased 3% sequentially. Petroleum and some of the smaller vertical solutions grew while the multi-lane retail business was steady compared to fourth quarter levels.

Gross margin came in at 39.2%, up from 37.9% in the prior quarter and 35.2% in the year-ago quarter. The improvement in gross margin was driven by favorable product mix in Europe and lower corporate costs primarily resulting from lower launch expenses.

Operating expenses increased $4 million this quarter to $51.9 million. G&A increased $2.4 million. R&D increased $0.9 million and sales and marketing expenses increased $0.7 million. The recently acquired Clear Channel Taxi Media business accounted for $0.5 million of the increase in sales and marketing expenses.

Earnings per share came in at 26 cents, easily beating the Zacks Consensus Estimate of 18 cents.

During the quarter, VeriFone generated $54 million of cash from operations and used $1.9 million in capital expenditures. The company exited the quarter with cash and equivalents of $374.6 million, up from $324.9 million at the end of the prior quarter. As of January 31, 2010, debt was $466.4 million, down from $468.8 million at the end of the previous quarter.

Management has revised its guidance for 2010. VeriFone now expects revenues between $925 million and $940 million in 2010, up from the previous estimate of $900 million to $945 million. Earnings per share (EPS) are forecasted between $1.00 and $1.10, up from the previous estimate of 97 cents to $1.07.

For the second quarter, management expects revenues between $225 million and $230 million, up 12% – 14% year over year. EPS is projected around 25 – 26 cents.

Meanwhile, VeriFone continues to take strategic steps to expand its business both domestically and internationally.

Last month, VeriFone acquired the Clear Channel Taxi Media business from Clear Channel Outdoor. VeriFone intends to leverage this well-developed channel into its Media Solutions payment-enabled business.

VeriFone has also entered the mobile payment initiation space in China. As a co-lead investor in Trunkbow International Holdings, VeriFone acquired an 8.6% ownership in Trunkbow and a seat on its board of directors. Based in Jinan, China, Trunkbow is a leading provider of technology platforms that enable mobile payments and mobile value added service applications.

Management believes that mobile phones are playing an increasingly active role in the initiation of payment transactions both within the existing payments infrastructure as well as with other telecommunications carriers like China Mobile, China Telecom, and China Unicom.

The company expects that this investment will provide an opportunity to expand its footprint in the growing market of China. Together with its telecom partners, Trunkbow expects to deploy approximately 125,000 mobile payment terminals integrated with its 2.4 gigahertz technology over the next three years.

The stock price fell 6.54% in after-hours trading to close at $19.30. In regular hours, the stock gained 4.77% to close at $20.65.

Zacks Investment Research

(PAY) VeriFone Holdings Tops Earnings Estimates

Sberbank, which ultimately intends to distribute approximately 130,000 payment solutions among merchants, has selected VeriFone as its leading vendor. The bank will utilize VeriFone’s countertop and wireless payment solutions, as well as PIN pads.

Meanwhile, VeriFone is expected to report first quarter 2010 results on March 2, 2010. Management expects revenues between $215 million and $218 million in the first quarter of fiscal 2010. Earnings per share are projected around 22 cents – 23 cents.

The current Zacks Consensus Estimate for the first quarter of 2010 is 18 cents per share compared to management’s projection of 22 – 23 cents. For the full year of fiscal 2010, VeriFone expects net revenues to be between $900 million and $915 million. Earnings per share are estimated between 97 cents and $1.07.

Over the past 30 days, 1 of the 6 analysts covering the stock has raised their estimates for fiscal 2010. The Zacks Consensus Estimate for 2010 is 86 cents per share.

Fourth quarter results beat management’s expectations as the company saw a recovery in all international markets and some signs of improvement in the domestic marketplace. Management believes that the growth in American markets should become challenging again once the stimulus is exhausted. Margins also showed improvement.

While earnings came in line with estimates in the fourth quarter of 2009, the company delivered a positive surprise of 53.85% in the third quarter. On average, VeriFone has come ahead of the Zacks Consensus Estimate by 31.47% in the last four quarters.

We believe that although there are signs of the economy bottoming out, recovery is going to slacken and revenue growth will be challenging. The prospect for margin recovery may be attributed to increasing inventory write-downs in the recent quarters, which in turn may lead to higher gross margins in the coming quarters.

Our long-term recommendation for VeriFone is Neutral, which means the stock will perform in line with the broader market. Our Neutral recommendation is supported by the Zacks #3 Rank (Hold).

Based in San Jose, California, VeriFone Holdings Inc. provides solutions for electronic payment systems for the financial, retail, hospitality, petroleum, transportation, government and health care vertical markets.

Zacks Investment Research

(PAY) VeriFone Holdings Wins Sberbank Order

Segment Overview

Mailstream Solutions revenue declined 8% in the quarter to $1.0 billion with currency providing 3.6 percentage points of benefit to the change in revenue. Earnings before interest and taxes (EBIT) declined 15% to $268 million compared with the prior year.

U.S. Mailing revenue declined 11% in the quarter to $499 million and EBIT declined 20% to $182 million when compared with the prior year.

International Mailing revenue declined 4% in the quarter to $241 million with currency providing about 10 %age points of benefit to the change in revenue when compared with the prior year. EBIT declined 3% to $41 million.

Worldwide Production Mail revenue declined 10% in the quarter to $160 million, with currency providing about 4 percentage points of benefit to the change in revenue, and EBIT declined 30% to $24 million compared with the prior year.

Software revenue increased 1% in the quarter to $105 million, with currency providing about 6 percentage points of benefit to the change in revenue, and EBIT increased 72% to $21 million compared with the prior year. EBIT margin reached 20% in the quarter, which was nearly double the prior year.

Mailstream Services revenue declined 2% in the quarter to $450 million with currency providing 1.6 percentage points of benefit to the change in revenue and EBIT increased 15% to $48 million compared with the prior year.

Management Services revenue declined 3% in the quarter to $271 million, with currency providing about 2 percentage points of benefit to the change in revenue, and EBIT improved 33 % to $23 million compared with the prior year.

Mail Services revenue increased 2% in the quarter to $145 million and EBIT increased 2% to $19 million compared with the prior year.

Marketing Services revenue declined 3% in the quarter to $33 million and EBIT declined 2% to $6 million compared with the prior year.

Balance Sheet and Cash Flow

Cash and cash equivalents were $426 million with long-term debt at $4.2 billion and shareowners’ equity at 13.6 million. Free cash flow was $223 million for the quarter and $889 million for the year. On a GAAP basis, the company generated $94 million in cash from operations for the quarter and $826 million for the year, which was partially used to reduce debt by $242 million during the year. Free cash flow for the year benefited from lower levels of receivables and inventory as well as reduced capital expenditures.

Looking Ahead

The company expects 2010 revenue to be in a range of flat to 3% growth, including an anticipated 2% benefit from currency translation. Adjusted earnings per share are expected to be in the range of $2.30 to $2.50 for the year. Adjusted earnings per share exclude the expected impact of $100 million to $150 million of pre-tax restructuring charges associated with the company’s previously announced transformation initiatives.

Adjusted earnings per share also excludes an expected non-cash tax charge of approximately 7 cents per diluted share associated with out-of-the-money stock options that expire principally in the first quarter of 2010.

Pitney Bowes Inc. provides mail processing equipment and integrated mail solutions in the United States and internationally. It offers a suite of equipment, supplies, software, and services for end-to-end mailstream solutions, which enable its customers to optimize the flow of physical and electronic mail, documents, and packages across their operations.

We currently have a Neutral recommendation on PBI.

Zacks Investment Research

(PBI) Pitney Bowes Earnings Exceed Consensus Estimates

Company Description

Xerox Corp is well known for its copy, printer and multi-functional machines as well as software solutions to improve business productivity. The company also sells paper and network integration products.

Another Surprise

Xerox just announced quarterly results on Jan 21 that showed earnings per shares of 25 cents, 3 cents better than analysts expected. This marked the company’s fourth consecutive earnings surprise.

Revenues dipped slightly to $4.2 billion, but Xerox’s continued efforts to streamline its business model leaves it well positioned for an economic turnaround.

Estimates Rising

Analysts have submitted 11 upward revisions for full-year fiscal 2010 since the earnings release. The Zacks Consensus is now 79 cents, up from 73 cents. Next year’s forecasts are coming in at 99 cents, up from 94 cents.

If these levels are met, Xerox’s earnings growth rates will be 32% and 25%, respectively.

Valuation

Currently, shares of XRX are trading at 11 times forward earnings. Xerox’s price to sales ratio is about 0.5 times.

The Chart

Investors loved the earnings news, but the broader sell off weighed on the stock giving it an even better value. Take a look at the chart below.

Bill Wilton is the Growth Stock Strategist for Zacks.com. He is also the Editor in charge of the market-beating Zacks Growth Trader service

Zacks Investment Research

(XRX) Xerox Corporation – Analysts Have Submitted Eleven Upward Revisions

Total revenue declined 3% to $4.2 billion due to economic weakness. Production revenue decreased 4% to $1.3 billion; Office revenue 2% to $2.4 billion; and Other revenue 10% to $545 million.

Post-sale and financing revenue were flat or went down 4% in constant currency. Equipment sale revenue shrank 11% or 15% in constant currency. Gross margin was 39.9% in the quarter, an increase of two percentage points from the prior year quarter.

Annual Results

Xerox reported a net income of was $526 million or 60 cents per share (before special items) for 2009. This is also higher than the Zacks Consensus Estimate of 57 cents per share. Total revenue went down 14% to $15.2 billion.

Financial Position

Xerox ended the year with a cash balance of $3.8 billion. Long-term debt increased to $8.3 billion from $6.8 billion in 2008. Long-term debt-to-capitalization ratio stood at 54% as of December 31, 2009.

Xerox generated $2.2 billion of operating cash flow in 2009, exceeding its full-year expectations by $500 million. Capital expenditures reduced drastically to $95 million from $206 million in the previous year.

Outlook

Xerox anticipates adjusted EPS to lie in the range of 11–13 cents for the first quarter of 2010. Including the impact from acquisition of Affiliated Computer Services, the company expects adjusted EPS to be in the range of 75–85 cents for 2010. These are compatible with the Zacks Consensus Estimates.

Xerox Corporation — headquartered in Norwalk, Connecticut — is engaged in the development, manufacture, marketing, servicing and financing of document equipment across the world. It also provides software and workflow solutions and services worldwide.

Innovation in the managed print services and efficient cost management are some of the positive factors associated with the company. However, intense competition from its peers including Canon (CAJ), Hewlett-Packard (HPQ) and Lexmark (LXK) as well as escalating amount of debt are detrimental to its future. Therefore, we continue to recommend the shares of the company as Neutral.

Zacks Investment Research

(XRX) Xerox’s Earnings Report Outdoes Estimates

Management stated that consumers now want to take advantage of electronic payment options in locations that offer unique media and marketing opportunities. VeriFone currently provides advertising opportunities on a number of its taxi cab payment systems in New York City.

Management now intends to broaden this footprint nationwide and begin a major initiative introducing other payment-enabled media opportunities.

As part of this new initiative, VeriFone is announcing a major refresh of its taxicab technology to include IP-connected Flash 10 technology and dynamic content generation capabilities. VeriFone intends to roll this technology out to all of its New York taxicabs by June 2010.

Additionally, VeriFone intends to build its payment-enabled media sales force to more than 20 sales representatives serving both local and national media buyers. Management expects to accomplish this by the first quarter of 2010. Earlier this month, the company reported results for the first quarter of fiscal 2010 which beat management estimates.

Management stated that it sees a recovery in all international markets and some signs of improvement in the domestic marketplace. Management believes that the growth in American markets is driven by recovery from the stimulus and the environment should become challenging once the effects of the stimulus wane.

Our long-term recommendation for VeriFone is Neutral, which means the stock will perform in line with the broader market.

Based in San Jose, California, VeriFone designs, markets and services a transaction automation system that facilitates electronic payments among consumers, merchants and financial institutions.

Zacks Investment Research

(PAY) VeriFone Holdings Launches New Initiative

Looking first at Housing Starts, they rose by 8.9% to an annual rate of 574,000 up from 527,000 in October. The October number for housing starts was originally reported as 529,000. The rate last month was 12.4% below the 655,000 rate of a year ago (and over 2 million at the peak).

The gains were widespread, will all four regions posting housing starts gains for the month. Leading the way was the Northeast, which saw a 16.4% rise in housing starts on the month and is now seeing housing starts at a rate that is 14.3% above year-ago levels. That is nice to see, but keep in mind that a year ago was not exactly a boom time for housing starts.

The Northeast is also by far the smallest of the four regions when it comes to housing starts data, particularly new housing starts data. Even with the increase, it represented only 11.1% of the total housing starts in the country (up from 10.4% last month).

However, right behind the Northeast was the South, which is by far the largest region of the country when it comes to new housing starts. There housing starts rose by 12.3% on the month but remain 15.2% below year-ago housing starts levels. The South was responsible for 52.4% of all housing starts in November. The Midwest lagged well behind with a 3.0% on the month, but with housing starts just 2.8% below year-ago levels. The West fared the worst on the month with just a 1.9% rise, which left housing starts 23.4% below last year’s levels.

However, the big story this month is not in the regional variations, it is in the difference between single family housing starts and apartment (and condo) housing starts. Single-family housing starts were up just 2.1% from October and are now actually above the year-ago levels (by 5.3%) for the first time in recent memory.

The bulk of the increase in housing starts was due to the very volatile 5+ unit building category. There housing starts soared 62.7% in November relative to October. While impressive, it only partially restores the level after two months in a row of very sharp month-to-month declines, and is still below the level of August. It is also 53.9% below the pace of multifamily construction a year ago.

Given the record levels of vacant apartments, perhaps building lots more of them is not really such a good idea. However, as indicated in the graph below (from http://www.calculatedriskblog.com/), single-family housing starts make up the overwhelming majority of the total.

Turning next to Building Permits, which are the best indicator of future housing starts, they also rose for the month. Nationwide, building permits rose 6.0% from October but were down 7.3% from a year ago. Regionally the South led the way in building permits, with a 10.7% rise for the month, which left building permits levels just 1.6% below last year’s level.

The Northeast followed with a 4.7% gain in building permits for the month and left building permits 6.9% below year-ago levels. The West saw a 2.7% gain in building permits on the month, but building permits there are still 26.0% below last year. The Midwest fared the worst for the month, with a 1.9% decline in building permits, but it is the only region where building permits are actually above last year’s levels (by 4.1%).

The increase in New Home sales last month makes the rise in housing starts and building permits much less of a long-term problem than it would have been if new home sales had stayed depressed. Thus we are free to focus on the more positive aspect of the rebound in building permits and housing starts.

These are not insignificant. Traditionally, Residential Investment is the part of the economy that leads coming out of recessions. New housing starts and building permits rising are a direct indication of Residential Investment going up. Residential Investment was actually a slight positive to GDP growth in the third quarter after having been a major drag on the economy for over three years. The November numbers in starts and building permits indicate that it will be additive to growth in the fourth quarter as well.

Also, a rise in housing starts and building permits means jobs for construction workers, and for those firms like LSI Industries (LYTS) which make the lighting fixtures that go into the new homes. It is also a positive for the soon-to-be-merged Black & Decker (BDK) and Stanley Works (SWK), since those construction workers will presumably need new tools to work with. All three of those firms hold the coveted Zacks #1 Rank. Housing, and housing starts, have been at the heart of the recession, and this report indicates that it will at least participate in the recovery.

Substantial headwinds still exist, as mortgage delinquencies continue to rise, foreshadowing another huge wave of foreclosures in 2010. Those foreclosures will be in competition with new housing starts and will keep up the pressure on housing prices. In other words, we are not out of the woods yet, but at least we have found a clearing in those woods.

Given how weak housing starts and building permits were earlier in 2009, it is very likely that they will turn very positive on a year-over-year basis in the months to come, even if housing starts are unchanged on a month-to-month basis. That said, Residential Investment is in no danger of going back to the over 6% of GDP level it was at during the peak, or even its long-term average of about 4.6% of GDP, anytime soon. It also will not remain at record low levels of below 3% of GDP forever. It does not even have to recover halfway to provide a significant boost to the economy.

Even if we were only to see starts rebound to the 1 million level, which would still be historically depressed (especially since the numbers are not adjusted for a growing population), it would still provide a substantial lift to the economy if it were to happen by the end of 2010.

Put this report in the plus column.

Dirk van Dijk, CFA is the Chief Equity Strategist for Zacks.com. With more than 25 years investment experience he has become a popular commentator appearing in the Wall Street Journal and on CNBC. Dirk is also the Editor in charge of the market-beating Zacks Strategic Investor service.

Zacks Investment Research

(LYTS) Housing Starts and Building Permits Rebound

Gross margin came in at 37.9% compared to 34.7% in the year-ago quarter. This was mainly due to a lower inventory charge compared to the year-ago quarter.

Net income came in at 26 cents per share easily beating the Zacks Consensus Estimate of 20 cents. During the quarter, the company generated $75 million of cash from operations. Inventory declined by $2.6 million in the fourth quarter to $96 million, compared to $168 million at the end of fiscal 2008. The company ended the quarter with cash and equivalents of $325 million.

For full fiscal year 2009, revenues came in at $844.7 million, down 8% from a year ago. Gross margin came in at 36% compared to 35.8% in the year-ago quarter. Net income per share came in at 85 cents per share easily beating the Zacks Consensus Estimate of 65 cents.

Management stated that it saw a recovery in all international markets and some signs of improvement in the domestic marketplace. Management believes that the growth in American markets is driven by recovery pushed by the stimulus and environment should become challenging once the stimulus finishes.

In the past few quarters, VeriFone experienced lower-than-expected revenue levels and softer demand globally due to weakened markets and adverse economic conditions. However, business started showing signs of improvement from the third quarter onwards. Management is now eyeing emerging markets for growth as there is little scope for expansion in developed countries.

Going forward, management expects revenues between $215 million and $218 million in the first quarter of fiscal 2010. Earnings per share is projected around 22 cents – 23 cents.
For the full year of fiscal 2010, VeriFone expects net revenues to be between $900 million and $915 million. Earnings per share is estimated between 97 cents and 107 cents.

Our long-term recommendation for VeriFone is Neutral, which means the stock will perform in line with the broader market.

Based in San Jose, California, VeriFone designs, markets and services a transaction automation system that facilitates electronic payments between consumers, merchants and financial institutions.

Zacks Investment Research

(PAY) VeriFone Holdings Beats Earnings Estimates

Management had earlier stated that business has begun to recover in both domestic and international markets. The company expects revenues between $208 million and $215 million in the fourth quarter of fiscal 2009.

Earnings per share (EPS) are estimated between 23 cents and 25 cents.

The company doesn’t expect a meaningful decline in inventory in the quarter but is exploring alternative supply chain structures with contract manufacturers, which should result in further reductions in 2010.

For full year 2009, VeriFone projects revenues between $835 million and $842 million. EPS is projected between 83 cents and 85 cents. Management expects the worldwide economy will recover moderately and expects a 10% growth in 2010.

Although there are signs of the economy are recuperating, recovery is going to slacken and revenue growth will be challenging. The prospect for margin recovery may be attributed to increasing inventory write-downs in the recent quarters, which in turn may lead to higher gross margins in the coming quarters.

In the past few quarters, VeriFone experienced lower than expected revenue levels and softer demand globally due to weakened markets and adverse economic conditions. However, the company’s results for the fiscal third quarter were ahead of expectations.

Given the economic turmoil, the company resorted to cost-cutting measures to keep up the margins. VeriFone reduced its headcount by approximately 500 in the past twelve months. The company also announced a re-orientation of its engineering efforts towards cost redesign across all of its major platforms and completed 7 of the 14 cost reduction projects. The target for this initiative is a 300 basis point reduction in cost of goods sold by the fourth quarter of 2009.

Our long-term recommendation for VeriFone is Neutral, which means the stock will perform in line with the broader market.

Based in San Jose, California, VeriFone designs, markets and services a transaction automation system that facilitates electronic payments between consumers, merchants and financial institutions.

Zacks Investment Research

(PAY) Earnings Preview for VeriFone Holdings

Revenue for the quarter was $1.36 billion compared with $1.55 billion in the prior year, a decline of 12%. A stronger dollar reduced revenue by 2% year-over-year.

The sustained nature of the recessionary environment is also driving some fundamental changes in the way businesses and customers connect, communicate and complete transactions in the global marketplace. Companies in most industries still have limited visibility and uncertain outlooks resulting in rising unemployment and ongoing caution about capital expenditures. These factors have contributed to depress mail volumes in mail intensive industries. Mailstream Solutions revenue declined 12% on a constant currency basis compared with the prior year. On a reported basis, revenue declined 14% to $925 million and earnings before interest and taxes (EBIT) declined 21% to $227 million compared with the prior year. Within Mailstream Solutions, U.S. Mailing revenue declined 12% to $491 million and EBIT declined 19% to $178 million compared with the prior year. Revenue declined by 4% and EBIT declined by 8% compared with the second quarter. International Mailing revenue declined 11% on a constant currency basis compared with the prior year.

Mailstream Services revenue declined 6% on a constant currency basis compared with the prior year. On a reported basis, revenue declined 8% to $432 million and EBIT increased 26% to $50 million compared with the prior year. Management Services revenue declined 8% on a constant currency basis compared with the prior year. Mail Services revenue declined 3% on a constant currency basis.

As a result of its strategic alliance with Hewlett-Packard in Sep 2009, the company launched the IntelliJet Printing System for high volume transactional mailers. During the quarter it also announced two partnerships that will help it expand its presence in the growing Asia Pacific market. Cannon marketing Japan will distribute one of its lower end metering systems to small and medium sized businesses in the Japanese market. It has also partnered with Digital China to distribute a variety of mailing solutions and software systems that provide variable data composition to small and medium sized businesses throughout China .

Free cash flow was $223 million for the quarter while on a GAAP basis the company generated $249 million in cash from operations. Free cash flow benefited from lower capital expenditures and lower levels of finance receivables. During the quarter the company paid $75 million of dividends to common shareholders. Cash and equivalents were $460 million with long-term debt at $4.2 billion and shareowners’ equity at $77 million.

The company expects earnings per diluted share from continuing operations, on a GAAP basis for the year, within the range of $2.09 to $2.21. The current Zacks Consensus Estimate is $2.25 per share. Revenue for the year is now expected to decline by 5% to 8% on a constant currency basis and 8 to 11% on a reported basis.

Pitney Bowes Inc. provides mail processing equipment and integrated mail solutions in the United States and internationally. It offers a suite of equipment, supplies, software, and services for end-to-end mailstream solutions, which enable its customers to optimize the flow of physical and electronic mail, documents, and packages across their operations. The company’s Mailstream Solutions group engages in the sale, rental, and financing of mail finishing, mail creation, shipping equipment, and software; and provision of supply, support, and other professional services, as well as payment solutions in the United States and internationally. Its Mailstream Services group offers facilities management services; secure mail services; reprographic, document management services; and litigation support and eDiscovery services. The company, formerly known as Pitney Bowes Postage Meter Company, was founded in 1920 and is headquartered in Stamford , Connecticut . Nearest competitor is Siemens AG (SI).

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(PBI) Pitney Bowes’ Earnings Report Barely Exceeds Estimates

The business will focus on sales, consulting and implementation of VeriShield Protect and VeriShield Retain and future initiatives are aimed at helping retailers and processors protect consumer data. VeriFone also plans to focus on reducing the complexities and costs of PCI compliance.

Based in San Jose, California, VeriFone designs, markets and services a transaction automation system that facilitates electronic payments between consumers, merchants and financial institutions.
Earlier, Verfione doubled its investment in the security technology developer Semtel Corp. and announced that it will become the lead investor in a Series B financing of Semtek. Additionally, VeriFone and Semtek entered into a worldwide distribution agreement which allows VeriFone to license Semtek encryption technology to all other point-of-sale hardware vendors. Semtek is the developer of encryption technology that is the core element of VeriFone’s VeriShield Protect end-to-end encryption solution for securing cardholder data.

The company is all set to gear up and expand its business as capital spending improves in the second half of 2009. In particular, business in Asia continues to hold well.

Last month, the company reported better-than-expected results for the third quarter as profitability improved due to reduction in inventory charges. Management added that business has recovered in both domestic and international markets. Although there are signs of the economy bottoming out, recovery is going to slacken and revenue growth will be challenging. We would like to be on the sidelines given the continued near-term uncertainty.

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(PAY) VeriFone Holdings Forms Global Security Solutions Business Unit

Company Description

Most of you are probably familiar with the Coinstar machines at local grocery stores. For anyone who has not seen these machines, they are about the size of an ATM and allow customers to convert accumulated change into cash or gift certificates. Coinstar then takes out a processing fee.

Additionally, the company owns the growing number of “Redbox” kiosks that offer self-service DVD rentals. Coinstar also operates other various self-service kiosks.

Revenue up 43%

Last quarter the company posted revenue of $314 million, a 43% jump from the $220 in the same period last year. Net income more than doubled to $7.0 million, up from $2.7 million.

These numbers yielded earnings per share of 23 cents, topping the Zacks Consensus Estimate by 6 cents. This was the third surprise in the past 4 quarters. Coinstar missed by a penny 2 quarters ago.

Raising the Bar

In the same press release, management also raised guidance for the remainder of the year and analysts were not far behind. The full-year Zacks Consensus Estimate for 2009 is up 25 cents to 99 cents since the report.

Next year’s estimates are averaging $1.62, up 31 cents in that same time frame. These levels would show year-over-year growth of 68% and 64%, respectively.

The Chart

Shares of CSTR have shown some volatility lately, but have a solid earnings history. In addition, the consensus estimates have never been higher. Take a look at the chart below.

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(CSTR) Coinstar Inc. – Revenue up 43% From Same Period Last Year

Revenues from Asia were strong in particular, posting a 74% sequential growth. However, revenues from Latin America declined 24%. On a non-GAAP basis, gross margin was 36.8% compared to 33.8% in the prior quarter and 37.6% in the year-ago quarter. Operating expenses were down 45% year over year.

The majority of the improvement came from a reduction in net inventory related charges. VeriFone had earlier made provisions for excess inventory in order to adjust to lower demand.

On a GAAP basis, EPS was 26 cents compared to 22 cents in the previous quarter and a loss of 9 cents in the year-ago quarter. On a non-GAAP basis, EPS came in at 26 cents, easily beating the Zacks Consensus Estimate of 13 cents.

Going forward, management stated that business has begun to recover in both domestic and international markets. Management expects revenues between $208 million and $215 million in the fiscal fourth quarter. On a non-GAAP basis, net income is estimated between 23 cents and 25 cents.

For the full year, VeriFone projects revenues between $835 million and $842 million. On a non-GAAP basis, net income is projected between 83 cents and 85 cents.

Inventory for the quarter came to $98.5 million, down from $105.6 million at the end of the previous quarter. Although there are signs of the economy bottoming out, recovery is going to slacken and revenue growth will be challenging. We would like to be on the sidelines given the continued near-term uncertainty.

In a separate statement, VeriFone announced that it entered into a settlement with the Securities and Exchange Commission in connection with the previously disclosed investigation into the company’s 2007 restatement of certain of its quarterly financial results. The restatement resulted primary from some incorrect inventory accounting adjustments made by a former employee. VeriFone agreed to a permanent injunction against future violations of certain reporting, books and records and internal accounting control provisions of the federal securities laws.

Based in San Jose, California, VeriFone designs, markets and services a transaction automation system that facilitates electronic payments between consumers, merchants and financial institutions.

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($PAY) VeriFone Report Doubles Consensus Estimates

Management is not expecting any rebound in overall markets in the near future as the economy still reels under the effect of deep recession. The company will thus keep on seeing contractions of inventory in the North American distribution network, failures of large retailers and possible collapse of businesses that will disrupt its network. VeriFone also continues to face currency translation risk.

A significant chunk of inventory reduction and lower capital expenditures resulted in free cash flow of $60 million during the second quarter. However, management indicated in the earnings conference call that inventory may remain at current levels, implying that free cash flow generation may not be the same in the upcoming quarter.

As sales growth remains challenging, VeriFone is taking steps to maintain profitability. Since the beginning of 2008, the company has reduced its quarterly expense run rate by $4.5 million representing $18 million in annualized expense reductions. In addition, VeriFone reduced its headcount by approximately 500 in the past twelve months.

VeriFone also announced a re-orientation of its engineering efforts towards cost redesign across all of its major platforms and completed seven of the 14 cost-cutting projects. The target for this initiative is a 300 basis point reduction in cost of goods sold by the fourth quarter of 2009.

Given continued near-term uncertainty, we maintain our Neutral rating on the stock.

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(PAY) VeriFone Management Not Expecting Rebound

Company Description

Coinstar, Inc. owns and operates a line of coin counting and vending machines. The company also operates DVD kiosks outside of grocery and convenient stores. Coinstar operates internationally and has a market cap of $1.01 billion.

Fourth-Quarter Results

Coinstar flexed some muscle in February when the company reported strong r fourth-quarter results that showed a big improvement from the previous year.

Revenue was up 96% to $261 million. Income came in at $4.2 million, up from a loss of $37.2 last year, producing earnings of 15 cents per share, one penny behind the consensus.

Full-Year Results

For the year, Coinstar reported sales of $911.9 million, up 67% from the previous year, with earnings of 50 cents per share, compared to a loss of 80 cents last year.

Estimates

Estimates are a bit mixed, with the longer-term projections more bullish than the shorter-term. The current-year estimate is holding steady at 76 cents per share, a bullish 28% earnings growth projection. The next-year estimate, however, is up 20 cents in the last 90 days, to $1.42 per share, an impressive 87% growth projection.

The Chart

Shares of CSTR have been locked into a really nice rally for the last 6 months after bottoming out just above $15 in early December. Take a look below.

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(CSTR) Coinstar, Inc. – Momentum – Zacks Rank Buy

Company Description

Knoll Inc, a leading designer and manufacturer of branded office furniture products and textiles, serves clients worldwide. The company focuses on innovation and modern design, yielding a comprehensive portfolio of products designed to provide enduring value and help clients shape their workplaces with imagination and vision.

The Pennsylvania-based furniture maker is involved in the green movement through organizations like the U.S. Green Building Council and is a member of the Chicago Climate Exchange. Founded in 1938, the company employs over 4,200 people and carries a market cap of $575 million.

Earnings increase 41%

On Oct 16 Knoll announced third-quarter results including a 41% year-over-year increase in earnings per share. Reported EPS were 52 cents, 11 cents higher than analyst estimates and 15 cents higher than the third quarter of 2007.

Net sales rose 11.6% year-over-year to $284 million. The increase yielded operating income of $41.1 million, a 14.5% increase from the third quarter last year.

Currently the backlog is $203 million, almost 20% higher than the 170 million recorded one year ago.

Estimates Rising

After the fourth earnings surprise in the past 4 quarters, estimates are climbing. The most recent estimate for the current year has come in 5% higher than the consensus, $1.83 compared to $1.75. The consensus estimate would yield an annual growth rate of 19%.

Attractive Valuations

Shares of KNL are currently trading around 8 times next year earnings. Knoll’s projected 5-year growth rate is currently 23%, which is fairly price. The company’s PEG ratio is 0.53, much lower than the industry average of 1.31.

The Chart

The stock sold off sharply, but saw a nice bounce heading into its earnings announcement on Oct 16. Shares were consolidating under $12, before breaking out post earnings announcement.

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(KNL) – Knoll – third-quarter results including a 41% year-over-year increase in earnings per share

Company Description

Knoll Inc, a leading designer and manufacturer of branded office furniture products and textiles, serves clients worldwide. The company focuses on innovation and modern design, yielding a comprehensive portfolio of products designed to provide enduring value and help clients shape their workplaces with imagination and vision.

The Pennsylvania-based furniture maker is involved in the green movement through organizations like the U.S. Green Building Council and is a member of the Chicago Climate Exchange. Founded in 1938, the company employs over 4,200 people and carries a market cap of $575 million.

Earnings increase 41%

On Oct 16 Knoll announced third-quarter results including a 41% year-over-year increase in earnings per share. Reported EPS were 52 cents, 11 cents higher than analyst estimates and 15 cents higher than the third quarter of 2007.

Net sales rose 11.6% year-over-year to $284 million. The increase yielded operating income of $41.1 million, a 14.5% increase from the third quarter last year.

Currently the backlog is $203 million, almost 20% higher than the 170 million recorded one year ago.

Estimates Rising

After the fourth earnings surprise in the past 4 quarters, estimates are climbing. The most recent estimate for the current year has come in 5% higher than the consensus, $1.83 compared to $1.75. The consensus estimate would yield an annual growth rate of 19%.

Attractive Valuations

Shares of KNL are currently trading around 8 times next year earnings. Knoll’s projected 5-year growth rate is currently 23%, which is fairly price. The company’s PEG ratio is 0.53, much lower than the industry average of 1.31.

The Chart

The stock sold off sharply, but saw a nice bounce heading into its earnings announcement on Oct 16. Shares were consolidating under $12, before breaking out post earnings announcement.

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(KNL) – Knoll – third-quarter results including a 41% year-over-year increase in earnings per share

Company Description

Knoll Inc, a leading designer and manufacturer of branded office furniture products and textiles, serves clients worldwide. The company focuses on innovation and modern design, yielding a comprehensive portfolio of products designed to provide enduring value and help clients shape their workplaces with imagination and vision.

The Pennsylvania-based furniture maker is involved in the green movement through organizations like the U.S. Green Building Council and is a member of the Chicago Climate Exchange. Founded in 1938, the company employs over 4,200 people and carries a market cap of $575 million.

Earnings increase 41%

On Oct 16 Knoll announced third-quarter results including a 41% year-over-year increase in earnings per share. Reported EPS were 52 cents, 11 cents higher than analyst estimates and 15 cents higher than the third quarter of 2007.

Net sales rose 11.6% year-over-year to $284 million. The increase yielded operating income of $41.1 million, a 14.5% increase from the third quarter last year.

Currently the backlog is $203 million, almost 20% higher than the 170 million recorded one year ago.

Estimates Rising

After the fourth earnings surprise in the past 4 quarters, estimates are climbing. The most recent estimate for the current year has come in 5% higher than the consensus, $1.83 compared to $1.75. The consensus estimate would yield an annual growth rate of 19%.

Attractive Valuations

Shares of KNL are currently trading around 8 times next year earnings. Knoll’s projected 5-year growth rate is currently 23%, which is fairly price. The company’s PEG ratio is 0.53, much lower than the industry average of 1.31.

The Chart

The stock sold off sharply, but saw a nice bounce heading into its earnings announcement on Oct 16. Shares were consolidating under $12, before breaking out post earnings announcement.

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To truly take advantage of the Zacks Rank, you need to first understand how it works. That is why we created the free special report: Zacks Rank Guide: Harnessing the Power of Earnings Estimate Revisions.

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(KNL) – Knoll – third-quarter results including a 41% year-over-year increase in earnings per share