NEW YORK (Real Money) -- Shares of VeriFone (PAY), which reports earnings after the market closes Thursday, have been steadily rising since mid-March. The company is the electronic-payments space's 800-pound gorilla, but dozens of Silicon Valley start-ups are working feverishly to disrupt its business.
VeriFone was holding its own as recently as 2012, when revenue grew by 45% as many of its accounts upgraded. But the company has been caught off guard since then as the use of mobile and cloud-based payments have accelerated. Cloud services like Square and Stripe are taking hold, while mobile payments through apps like Uber's are eating into VeriFone's taxi-terminal business.
VeriFone has been left flat-footed and doesn't appear to have much of an answer to these rival products. Fiscal 2013 was a disaster, with revenue falling 9%. Revenue bounced back 9% in 2014, but VeriFone's business still isn't where it needs to be.
This year looks to be another tough one for the company. Analysts are expecting second-quarter revenue to rise 4.7% to $488.9 million as earnings per share hit 42 cents. Market watchers expect revenue for the year to grow 7% to $1.998 billion and EPS to total $1.83.
To me, VeriFone is stuck in the past. The company dominates the credit-card terminal sector, but that's a slow-growth business. Mobile electronic-payment volumes are expected to exceed $37 billion this year, but that benefits Apple (AAPL) and the Google (GOOG) (GOOGL) Android operating environments.