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Why VeriFone Systems Shares Jumped

By Evan Niu, CFA - Apr 23, 2013 at 3:08PM

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Is this meaningful, or just another movement?

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of VeriFone Systems (PAY) have jumped today, up by 13% at the high, after the company announced it scored a lucrative contract.

So what: VeriFone said it was awarded a two-year contract to provide managed services to payment systems in China operated by ChinaPnR. The Chinese company is outsourcing the management of services to VeriFone due to the complexity of the devices, which will allow ChinaPnR to concentrate on its core business.

Now what: Throughout the course of the contract, VeriFone will provide installation, training, and maintenance services and expand its relationship with ChinaPnR, which processes hundreds of billions of yuan annually of payments to numerous industries. VeriFone cites statistics from the People's Bank of China, which estimates that point-of-sale systems have grown by 43%, or 7.1 million, over the past six years, with 3.5 billion bank cards currently in circulation.

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