eriFone Holdings Inc., a POS terminal manufacturer, held an initial public offering (IPO) of 15.4 million shares on Friday, April 29, 2005, and VeriFone Chairman and Chief Executive Officer Douglas G. Bergeron rang The Opening Bell at the New York Stock Exchange (NYSE). VeriFone common stock is now traded on the NYSE under the symbol PAY.

For the IPO, VeriFone offered 7.7 million shares, and stockholders offered 7.7 million shares. The company had hoped that its shares would bring in an estimated $90.6 million. However, VeriFone cut the share price to $10 from a planned $12 - $14.

"They did not have enough demand from the purchasing institutions," said Robert Dodd, a Senior Analyst with Memphis, Tenn.-based investment house Morgan Keegan & Co. Dodd said that this does not necessarily reflect negatively on the company's potential. For VeriFone to conduct its IPO, "now is a relatively good period in terms of demand from the industry. Industry growth is expected to be in the mid to high teens" over the next several years, he said. Of the major equipment vendors, VeriFone has the smallest share of the international market. The company will "move more aggressively into the international markets," Dodd said.

As VeriFone gains global market share, competition among terminal manufacturers will increase. This will improve the quality of products and number of options available for merchants. In turn, this will enhance ISO and merchant level salesperson offerings to merchants.

Although VeriFone was among many IPOs that week to reduce their asking price of shares before trading started, a potential securities violation might have influenced VeriFone's action. In the week leading up to the IPO, an employee at Lehman Brothers Inc., one of VeriFone's principle underwriters, sent an e-mail to 45 potential investors that contained IPO evaluation materials. Lehmans' compliance department discovered the message and requested that recipients delete it. None of the e-mail recipients will be allowed to purchase stock from the IPO.

VeriFone was founded in 1981. The company's shares were publicly traded from 1990 to 1997, until Hewlett-Packard (HP) acquired it in 1997. In 2001, HP sold the division to Gores Technology Group LLC. One year later, privately held investment firm GTCR Golder Rauner LLC became the majority stockholder.

In related news, on April 27, another POS terminal manufacturer, Lipman Electronic Engineering Ltd., announced a proposed public offering of nearly 2 million shares. (On Jan. 29, 2004, Lipman debuted on the NASDAQ in an IPO under the symbol LPMA. Lipman sold 2.25 million shares worth approximately $124 million.) Lipman's additional offering of shares will benefit major shareholders, not the company, said Peter Swanson, Vice President and Senior Research Analyst with Minneapolis-based investment firm Piper Jaffray & Co. There is "no new stock to raise capital," he said. "Lipman's balance sheet will not change."

Swanson also said this doesn't necessarily indicate a downturn for the company. Rather, it is a case of certain venture capitalists and senior management reducing their stake in the company. It is "routine business practice," he said. "As time passes by, [shareholders] want to seek liquidity. [Lipman] is one of the best managed companies in the industry."

Both VeriFone and Lipman are in quiet periods surrounding their stock offerings. The companies referred comment to their respective SEC filings.