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Hewlett-Packard may look like a big, traditional equipment manufacturer, but its decision to acquire the sprightly darling of the e-commerce clique, VeriFone, for a whopping US$1.18 billion is likely to leapfrog it to the top of the Net-business heap.
"VeriFone gives them a solid front-end solution and HP has the backside. It's a really nice fit," said Scott Smith, director of the digital commerce group at Jupiter Communications. He pointed out that HP has been aggressively marketing its server solutions to banks and financial institutions, while VeriFone has garnered some 70 percent of the domestic point-of-sale transaction market with its credit- and debit-card swipe terminals.
HP's agreement to acquire VeriFone, announced Wednesday morning, could quickly bring to reality the notion of smartcard or secure credit card payments over the Net. Just last week VeriFone announced the first practical application of its handheld "personal ATM" - a deal with Citibank that will allow bank clients to download cash onto smartcards by plugging the device directly into a phone jack. The industry's next step will be for smartcard readers - like VeriFone's swipe terminals - to be built in or added onto desktop computers for smartcard purchases via the Net.
Looking to the future, "we see vast and exciting applications for smartcards that hold information ranging from bank balances and frequent-buyer reward programs to health records and cashless transactions," Hatim Tyabji, VeriFone chairman, president and CEO said in a press release.
At Spyrus, a maker of smartcards and hardware crypto solutions for e-commerce, principle scientist Stu Veath found the deal to be "big news, but not surprising." He said: "HP, along with Intel, has been getting more serious about putting security in their products.... Picking up VeriFone provides them with an immediate answer for e-commerce payments."
It will be about 90 days before the stock-to-stock merger is reviewed and potentially approved by the Federal Trade Commission, but the stock market cheered the announcement, shooting VeriFone stock up 58 percent to $46 at publication time from Tuesday's close at $30. HP stock was trading at $49.25, down nearly 2.5 percent.
