IN THE MOOD BLUES

[johnsyn]

can even skip carrying cash to yard sales. These type bump payments are suppose to outpace credit cards by 2020. As one commentor said, "makes the local drug dealer rejoice." LOL, and as they get busted, easier to look at phone history and drug test his iPad for drug residue than paper money. http://www.phonearena.com/news/Bump-Pay-brings-in-person-PayPal-transactions-to-iOS_id28569

I'm not endorsing it or any of the following, I just find it interesting and I pay for the following newsletter, but it is definitely a sector to consider for pennystock, as long as they hold the patents. That is a definite buyer beware. I see a number of the microcaps sitting in litigation in limbo.
Here's what a pricey analyst states:

we talked about – such as couponing, advertising and NFC-based services.
VeriFone PAY
Description: Global leader in secure electronic payment solutions and services
Buy Under: $56
Target Price: $75
A GameChanger Because:
On the cutting edge of point of sale (POS) electronic payment devices.
Reasons to Buy:
Three upcoming catalysts put the company in strong position for further growth
Acquisitions continue to grow the business and more are in the works
Strong earnings momentum but still attractively valued
PAY makes the bulk of its money from sales of these payment systems, but services have become an increasingly important part the business, accounting for 20% of revenues in the last fiscal year (which ended October 31, 2011). These services include repair and maintenance, large-scale customization services for customers, advertising, and a payment processing service for the taxi industry.
Three Catalysts for Growth
As you've probably noticed, these point-of-sale devices are pretty much everywhere these days. Here in the U.S., there are approximately 33 installed POS devices for every 1,000 people. That may not sound like a lot, but it does indicate the market is relatively mature.
Take a look internationally, however, and you see a much different picture. The game is still changing there, and there is a lot of room for growth. Even in developed countries, there are considerably fewer machines installed than in the U.S.: 18 per 1,000 people in Italy; 13 per 1,000 in the U.K., 11 per 1,000 in France, and 9 per 1,000 in Germany. As you would expect, the numbers are lower in still-developing nations, with 13 per 1,000 people in Brazil and less than 5 per 1,000 in China and India. In the most recent quarter, 45% of PAY's sales came in emerging markets, so they are well-positioned to profit as more nations follow the U.S. in the path to electronic transactions.
The U.S. market may be the most mature in the world, but there is still sizable growth potential that has a good chance of being realized. The reason is pretty interesting. Visa and MasterCard are among the leaders of a group of companies pushing for global technology standards called EMV, which stands for Europay, MasterCard and Visa. These are smartcards with little chips in them that can be used all over the world.
MasterCard and Visa are incentivizing U.S. retailers with lower audit fees if they install such systems by the end of this year, and if they do not switch by 2015, MasterCard and Visa will shift all fraud liabilities directly to retailers. This will strongly encourage – and practically force – between three million and four million U.S. retailers who operate with only a cash register (which uses older means of verification and processing) to adopt point-of-sales systems. VeriFone anticipates these changes will grow their addressable U.S. market by 50%. That's significant.
The third catalyst is the new mobile payment systems we talked about, such as Google Wallet and PayPal. VeriFone is in excellent position here even as the game continues to change because it can retrofit its systems to accept these, and in fact has already retrofitted 40,000 systems to accept Google wallet. There will also be more mobile wireless POS systems in stores, like the ones used in Apple stores. To help in this exciting new area, VeriFone acquired GlobalBay Mobile Technologies last November. GlobalBay provides mobile retail software applications, and its products complement VeriFone's mobile enterprise device that fits around an iPhone or iPad to accept mobile payments.
VeriFone actually made several acquisitions in the last few years that will boost growth. Two more in particular stand out: Last August, PAY acquired Hypercom, which also provides electronic payment solutions and value-added services at the point of transaction (like couponing), for $644 million. The deal helped VeriFone broaden its product and service offerings globally, and the payoff has been fast. Revenue recognized from Hypercom in fiscal 2011 was $65 million, or 25% of the company's total.
An even more significant acquisition came at the end of last year when VeriFone bought Point International, a Swedish company that is Northern Europe's largest provider of payment and gateway services and solutions for retailers. The deal was worth approximately 600 million euros plus payment of Point's outstanding debt of 170 million euros. It's important to understand that Point International is not a payment processor; it provides payment-related services to retailers, connecting them with banks and processors. This acquisition expands VeriFone's services, gives them a good deal of recurring revenues, and also enlarges the company's presence in Northern Europe, which is underpenetrated.
Building on Already Strong Results
In fiscal 2011, VeriFone's adjusted earnings jumped 45% to $1.92 a share; revenues grew 31% to $1.31 billion. One of the main drivers was a 43% increase in systems sales to foreign countries, which would have been only a 20% increase without the acquisitions we just talked about. Service revenues soared 54%, driven by acquisitions as well but also showing a strong 41% increase in organic sales in North America. These were the result of various efforts, including the company's taxi payment services. International service revenues grew 28.5% on an organic basis.
Strong growth continued in the first quarter of fiscal 2012 (reported March 5), with adjusted earnings growing 35% to $0.58 a share from $0.43 the year before. Revenues were up 50%, again largely due to the acquisitions made in 2011 but also featuring good internal growth with system revenues up 7% and service revenues up 10% organically.
Action to Take PAY
Buy PAY below $56
for a target of $75
Even with the current earnings momentum, PAY sells for approximately 20X estimated earnings for the current fiscal year. That's a reasonable valuation that becomes even more attractive when you consider the company's potential. Electronic payment processing remains a growing industry, especially in foreign markets where there's still significant opportunity, but also with the game-changing innovation taking place as companies scramble to be among the early leaders in mobile payment. VeriFone's large installed base of devices and systems almost assure that it will continue to be a leader for some time to come.
Buy PAY under $56, which is right around the stock's 52-week high that it just touched last Thursday. Our first target is $75, which would be a reasonable 23X earnings estimates of $3.30 a share for the fiscal year ending October 2013.
New GameChangers Buy: eBay (EBAY)
Let me say right up front that I love eBay (EBAY). I use it probably three times a week for everything from Spiderman pajamas for my son to the current bidding war I'm in for an autographed poster of hockey legend Bobby Orr flying horizontally across the ice.
I'm sure you're very familiar with eBay, so we don't need to spend a lot of time talking about what the company does. But if you think of eBay as still just online auctions, let me give you an update: It has developed from a fledgling online auction bazaar into a vital e-commerce center. EBay now provides an online platform for buyers and sellers in nearly 40 markets across a lot of product categories – vehicles, consumer electronics, clothing, books and yes, every collectible imaginable.
Here's the important point: With $69 billion in merchandise volume in 2011, eBay facilitated more than 15% of the world's e-commerce market, which totaled more than $450 billion.
eBay EBAY
Description: Online auction site
Buy Under: $42
Target Price: $55
A GameChanger Because:
Business expansions make it a vital e-commerce center, and its PayPal venture is a leading online payment standard.
Reasons to Buy:
Boasts a growing portfolio of large retail partners and marketplace offerings
PayPal's expanded offerings, low costs and high efficiency increases eBay's global commerce reach
Company is on a solid growth path
Still, you may be wondering why this 15-year-old business that saw its stock grow like a wildflower during the Internet bubble more than a decade ago is a game-changer today. The main answer: PayPal. PayPal's status as a leading online payment standard makes eBay an important e-commerce player. We mentioned earlier that PayPal's net total payment volume in 2011 was $119 billion. That's 20% of the global online payment industry.
Not Your Father's eBay
Amazon may be the leader in online shopping, but eBay will be an increasingly important player in e-commerce during the next several years because of a growing portfolio of large retail partners, adjacent marketplace offerings, and PayPal's assorted capabilities. In fact, eBay's abilities to facilitate traditional offline commerce through mobile payments and in-store PayPal point-of-sale tests are underappreciated by the market right now. With PayPal's expanding offerings, low costs and high efficiency, eBay's will be an increasingly vital facilitator of global commerce, which should translate into increased profitability and a higher stock price.
The company consists of three main units: First is what it calls "marketplaces," which is bringing together buyers and sellers – the roots of the company. The business has expanded well beyond eBay.com to also include sites like StubHub, Fashion, Motors and Half.com. They have also added technologies like RedLaser in mobile commerce and both Milo and Hunch in search. Milo enables search for goods at local retailers, and Hunch incorporates customers' needs and tastes into search.
The second is payments, and there is where PayPal, the real game-changer, comes in along with other services like Bill Me Later and Zong. PayPal contributed 38% of eBay's 2011 revenues. Buyers like the security and mass acceptance of PayPal, while sellers like its lower fraud rates and large user base. These benefits were originally realized on eBay, where around 85% of transactions are through PayPal. Now, PayPal is accepted by more than 60 of the top 100 online retailers and processes more than 25% of domestic online retail transactions.
With more than half of the world's Internet users coming from developing countries, PayPal, like VeriFone, has tremendous global potential. PayPal makes up 60% of eBay's global sales volume right now, and management believes it will double global cross-border payment volumes to $40 billion–$45 billion by next year. According to industry research firm Forrester, payment volumes have grown at a compounded annual rate of 25% the last five years, which is about three times as fast as the online retail market.
In addition to that trend continuing, other growth channels for the payment division include 1) PayPal's offline point-of-sale capabilities, which are being rolled out to as many as 20 national retailers this year; 2) increasing adoption of mobile commerce (eBay mobile accounted for about $5 billion in merchandise volume in 2010, with PayPal mobile generating $4 billion in payment volume); and 3) additional payment innovations, including Zong's ability to verify and clear payments through existing wireless carriers.
The third unit is GSI Commerce, which eBay acquired last year. GSI develops, builds and runs online shopping sites for companies, and with the acquisition, eBay extended the reach of its merchant services segment by adding GSI's e-commerce client base, which includes 180 retailers and prominent brands like Ralph Lauren, Victoria's Secret, and Dick's Sporting Goods. GSI offers its clients enhanced payment capabilities, wider geographic reach, and access to developing e-commerce trends.
Heading the Right Direction
Over the last few years, when many Internet stocks staged big comebacks, EBAY has lagged as consumers shifting away from the auction business, which represented 37% of marketplace volumes and 25% of total revenue in 2011. But now, eBay is on the right track to reinvigorate growth through new platform innovations. The company has overhauled its marketplaces to accommodate the fixed prices (63% of marketplace volumes and one- third of total revenue) through improved search, free shipping, mobile applications as well as complementary acquisitions (including local shopping and private sale sites). This all adds to the company's status as formidable e-commerce player, and eBay has regained a grip in categories like trendy and higher-end clothing. Other categories should experience a similar lift.
Action to Take EBAY
Buy EBAY below $42
for a target of $55
Strong evidence that eBay is heading in the right direction can be seen in the most recent earnings report, which showed promising signs of growth and acceleration in both payments and marketplaces. Revenues in the first quarter were $3.3 billion, up 29% from the previous year and 35% from the prior quarter, and exceeded Wall Street's expectations for $3.2 billion. The company earned $0.55 a share (non-GAAP), solidly ahead of estimates of $0.51.
Management raised 2012 fiscal-year guidance from revenues of $13.7 billion–$14 billion to a range of $13.8 billion–$14.1 billon, despite the sale of Rent.com. Even with the slight increase, I expect the company to exceed guidance, barring severe weakening in Europe. The buzz on the Street is also along these lines, with a number of analysts saying the growth in both payments and marketplaces points to a current "significant discount" to eBay's peers.
Buy EBAY under $42 for a first target of $55.