VeriFone's (symbol: PAY) 2008 annual shareholder meeting took place today at the Doubletree Hotel in downtown San Jose.
VeriFone, Inc. is a payment-processing-technology specialist. When you use your credit or debit card, someone has to handle the transfer of information from Point A to Point B in a secure format. VeriFone is trying to position itself as the worldwide financial middleman. However, it has been plagued by accounting scandals and as a result, its stock price is near a 52-week low.
The meeting was a bare-bones event. VeriFone did not have a presentation. The informal portion of the meeting involved only a Q&A session and lasted under 10 minutes. Only water was served from a cooler. Only three non-employees attended. I asked about the financial irregularities. The CEO said VeriFone had replaced the CFO and the general counsel in an effort to reform the company. He said the specific accounting problem was that the company overstated inventory and understated the cost of goods. (This accounting problem would cause the company to report an incorrect higher net profit for most of last year.) Class action lawsuits have been filed against VeriFone, and the 10K did not list any settlements or pending resolutions.
I asked several other questions about the company's business. The CEO's responses are below:
1. VeriFone already has 65% market share in the U.S and Canada, and Hypercom is their primary competitor. The main reason VeriFone does not have more market share is because the market wants an alternative, even if that alternative is not as good as VeriFone.
2. (The 10K states that profit margins are lower in the U.S. and Canada, but VeriFone is seeking to expand more internationally rather than domestically.) The reason VeriFone is focusing on international expansion is because emerging markets are not saturated. Only around 1 to 20% of retailers in Brazil, Turkey and other emerging markets use payment-processing technology, and the opportunities for growth are much better.
3. VeriFone's competitive advantage is that it spends the most on R&D and has the most employees. They are a safe, if not the safest, choice.
As a value play, it's hard to go against VeriFone. At the same time, it's also hard to promote a company that had ethical issues as recently as last year, especially in a post-Sarbanes-Oxley world. I personally think there are better companies in which to invest, but others may want to consider VeriFone after it resolves outstanding litigation.
Disclosure: I own less than 30 shares of Verifone (PAY).
"And if an epitaph be my story, I'd have a short one ready for my own: I had a lover's quarrel with the world." -- Robert Frost
Wednesday, October 8, 2008
Tuesday, October 7, 2008
Who Pays Taxes?
The WSJ (A25, October 7, 2008) had more statistics on the tax debate:
The top 20% pay 67% of all federal taxes--including not just income taxes, but payroll taxes, corporate taxes, and death/estate taxes. The top 1% of earners pay 26% of all federal taxes.
If Republicans want a return to the Reagan era, pointing out raw numbers isn't the way to get there. The average American knows the rich make the lion's share of money in this country. He also knows that no matter what the percentages and numbers are, unlike the average American, the rich don't have to worry about housing, food, or health care. Despite this knowledge, taxes have continued to come down for years in this country because the average American doesn't hate most rich people. In modern-day America, the majority of super-rich people don't inherit their wealth--they earn it, which gives them some immunity from European-style envy. Thus, the key goal of low-taxation advocates shouldn't be fairness per se. Instead, the goal should be to assure that everyone's tax contributions--no matter what the amount--are spent improving access to health care, infrastructure, and other quality-of-life services as well as cutting wasteful spending. A single dollar collected that goes towards more laws, more useless agencies, more unnecessary subsidies, and more lobbyist requests will damage everyone's faith in the system. In short, low-tax advocates must convince everyone that all taxes collected are going towards necessary services.
Americans want to be rich, so bashing the rich won't work in America as a primary political platform. The average American probably cares more about a) whether his or her tax dollars are spent for necessary services rather than special-interest spending; and b) whether taxes are enough to cover necessary services. Thus, the debate should be about what services are necessary, how the government can best deliver them, and whether the government is the best entity to deliver those services.
The top 20% pay 67% of all federal taxes--including not just income taxes, but payroll taxes, corporate taxes, and death/estate taxes. The top 1% of earners pay 26% of all federal taxes.
If Republicans want a return to the Reagan era, pointing out raw numbers isn't the way to get there. The average American knows the rich make the lion's share of money in this country. He also knows that no matter what the percentages and numbers are, unlike the average American, the rich don't have to worry about housing, food, or health care. Despite this knowledge, taxes have continued to come down for years in this country because the average American doesn't hate most rich people. In modern-day America, the majority of super-rich people don't inherit their wealth--they earn it, which gives them some immunity from European-style envy. Thus, the key goal of low-taxation advocates shouldn't be fairness per se. Instead, the goal should be to assure that everyone's tax contributions--no matter what the amount--are spent improving access to health care, infrastructure, and other quality-of-life services as well as cutting wasteful spending. A single dollar collected that goes towards more laws, more useless agencies, more unnecessary subsidies, and more lobbyist requests will damage everyone's faith in the system. In short, low-tax advocates must convince everyone that all taxes collected are going towards necessary services.
Americans want to be rich, so bashing the rich won't work in America as a primary political platform. The average American probably cares more about a) whether his or her tax dollars are spent for necessary services rather than special-interest spending; and b) whether taxes are enough to cover necessary services. Thus, the debate should be about what services are necessary, how the government can best deliver them, and whether the government is the best entity to deliver those services.
Barry Diller on Online Advertising
Barry Diller had an interesting interview today in the WSJ.
You really want to get a headache? Try to understand Internet advertising. Social networking advertising is being discounted because there is so much inventory [of available ad spots], and because methods have not yet been found to make it very effective. Will that get figured out? I absolutely believe it will. What form will it take? Absolutely unknown.
Mark Cuban seems to have found a potential solution/form in www.hulu.com
You really want to get a headache? Try to understand Internet advertising. Social networking advertising is being discounted because there is so much inventory [of available ad spots], and because methods have not yet been found to make it very effective. Will that get figured out? I absolutely believe it will. What form will it take? Absolutely unknown.
Mark Cuban seems to have found a potential solution/form in www.hulu.com
Monday, October 6, 2008
Update: DJIA Down 550 Points
Yes, it's a bloodbath today in the markets, but I am buying. In fact, I've spent more money today than I ever have, if you include my 401k purchases. As for individual stock picks, I bought GOOG, STT, YHOO, GE, and even some WYNN. Visa (V) looked interesting, too. Remember, Visa and Mastercard don't loan anyone money--they're just middlemen who get a transaction fee. In contrast, Discover and American Express have a more risky practice of loaning money themselves to certain customers or exposing some of their own assets to risk. I predict this recession will be over by May 2009, having started in December 2007. I hope to flip GOOG this week.
Saturday, October 4, 2008
Best...Spoof...Ever
© Columbia Business School Follies
http://www0.gsb.columbia.edu/students/organizations/follies/Follies/Welcome.html
Mark Cuban on How to Get Rich
More evidence Mark Cuban is a straight-talking genius:
http://blogmaverick.com/2008/10/04/how-to-get-rich/
I identify with the ketchup and mustard sandwiches (for me, it was Jack in the Box's 99 cent chicken sandwiches). I have a long way to go before even getting a tiny fraction of Cuban's net worth, but I am happy I currently have no debt after going to law school.
http://blogmaverick.com/2008/10/04/how-to-get-rich/
I identify with the ketchup and mustard sandwiches (for me, it was Jack in the Box's 99 cent chicken sandwiches). I have a long way to go before even getting a tiny fraction of Cuban's net worth, but I am happy I currently have no debt after going to law school.
Friday, October 3, 2008
Dave Ramsey's Plan
It's a moot point now, but here was Dave Ramsey's proposed plan:
http://www.daveramsey.com/common_sense_fix.txt
I mention it only because it recommends eliminating the capital gains tax entirely. His rationale is that rich people will use their own money to invest in the market--rather than risk not beating inflation by staying in cash or 2% money market funds--and the market will rise again on the backs of the upper class's investments, not general taxpayers. You have to admit, it's an interesting idea.
http://www.daveramsey.com/common_sense_fix.txt
I mention it only because it recommends eliminating the capital gains tax entirely. His rationale is that rich people will use their own money to invest in the market--rather than risk not beating inflation by staying in cash or 2% money market funds--and the market will rise again on the backs of the upper class's investments, not general taxpayers. You have to admit, it's an interesting idea.
Subscribe to:
Posts (Atom)