Friday, August 5, 2011

Visa backed Square Easily Hacked by Black Hat Researchers

It's Friday, August 5th and it's no longer Hip to be Square...

I wondered why Visa
(which expressed the opposite of interest when approached 18 months earlier by a company with the first 3DES DUKPT encrypted, dongle with a PCI 2.1 certified PIN Entry Device )  invested in Square but chalked it up to Rock Star Mentality (Jack Dorsey) vs. Rocket Science. (doing their homework)  I was equally puzzled when Kleiner Perkins invested 100 million into technology that is essentially nothing less than a skimmer.

Yesterday,  at the Black Hat Security conference, two researchers proved what many (but apparently neither Visa nor Kleiner Perkins) already knew.  The technology used by Square does two things very well:

1.  It enables Square as skimmer for cloning cards...and
2.  Enables the bad guys to easily and more readily use stolen card data for transactions without having to clone cards.  (translation: Square makes the bad guys job even easier!)  Kudos to Visa for their intensive due diligence and investing in an outfit that is suitable only for an emperor who wears no clothes.

I realize that Square will "eventually" add encryption, but why the *!#$ is it doing $4 million per day on the market in it's current form?   Can't wait to see how the JDL (Jack Dorsey Lovers) i.e.the media spin this major flaw into "brilliant disruptive technology"  

CNET:  LAS VEGAS--Researchers at the Black Hat security conference today revealed two ways the Square payment system, which turns any iPhoneiPad or Android into a point-of-sale credit card processor, could be used for fraud. Adam Laurie and Zac Franken, directors of Aperture Labs, discovered that they can transfer money from a stolen card into their bank account associated with Square without having to swipe a card through the Square dongle card reader. To do this, they used code written by Laurie that lets them feed magnetic stripe data from a stolen card into a microphone and convert it into a sound file. They then played that file--a series of beeps--into the Square device via a stereo cable which transmitted the data directly into the Square app. That effectively turns a merchant system that is designed to only accept physical cards for transactions into one that can be used for electronic-only transactions, enabling fraudsters to easily use stolen card data for transactions without having to create cloned cards and go to a store to make purchases or know PINs.

Read more:

Mobile payment system Square can be hacked, claims researchers

Two researchers attending the Black Hat security conference yesterday in Las Vegas have demonstrated a simple hacking technique that could allow unscrupulous individuals to purchase items using the mobile payment system Square and stolencredit card data. With this technique, would-be hackers could use stolen credit carddata to withdraw funds without the need to be in possession of the physical credit card.
Read More:

News for Square hacked at blackhat


  • Black HatSquare Credit-Card Reader Hacked!
    PC Magazine - 13 hours ago
    The researchers notified Square in February; Square responded that they see no significant threat. This hack also allowed them to effectively pull cash from ...
    23 related articles
  • WSJ: Stealing Money With Square

    I thought this article from WSJ was going to be about the $100 million Square got from Kleiner Perkins but it's about the inherent security flaw in the hardware device that Visa-backed Square released onto the market.

    Looks like Verifone, who was smashed in the mouth by the JDL was right about Square...right from  the beginning.

    Stealing Money With Square

    Wall Street Journal (blog) - Jennifer Valentino-DeVries - ‎36 minutes ago‎
    Laurie and Franken discussed the vulnerability as part of a talk at Black Hat, the annual security conference in Las Vegas. They said the problem with Square is just the latest example of how credit-card technology is vulnerable.

    Black HatSquare Credit-Card Reader Hacked!
    PC Magazine - Neil J. Rubenking - ‎14 hours ago‎
    In a small press preview at the Black Hat conference they demonstrated that playing the credit card sound has the same effect as scanning the card with the Square reader. The researchers notified Square in February; Square responded that they see no ...
    iPad Credit Card Reader Hacked As Skimmer
    InformationWeek - Mathew J. Schwartz - ‎29 minutes ago‎
    But speaking on Thursday at Black Hat, a UBM TechWeb event in Las Vegas, security researchers from Aperture Labs in England demonstrated a hack that criminals could use to convert skimmed cards into cash, via Square. "We were sitting in an airport ...

    Researchers Discover How to Steal Credit Card Data Using Square
    Mashable - Erica Swallow - ‎4 hours ago‎
    Researchers attending the Black Hat security conference on Thursday demonstrated two ways in which Square — a mobile gadget that enables Android, iPhone, iPad, and iPod touch users to accept credit card payments — can be hacked to steal credit card ...

    Mobile payment system Square can be hacked, claims researchers
    The Sociable - Darren McCarra - ‎3 hours ago‎
    Two researchers attending the Black Hat security conference yesterday in Las Vegas have demonstrated a simple hacking technique that could allow unscrupulous individuals to purchase items using the mobile payment system Square and stolen credit card ...


    Hypercom Corporation Announces Completion of Merger with VeriFone Systems, Inc.

    SCOTTSDALE, Ariz.--(BUSINESS WIRE)--Hypercom Corporation (NYSE: HYC) announced today the completion of its merger with a wholly-owned subsidiary of VeriFone Systems, Inc., following which Hypercom is now a wholly-owned subsidiary of VeriFone. In connection with the closing, Hypercom Corporation divested its U.S. payment solutions business to The Gores Group, LLC as part of its settlement with the U.S. Department of Justice, immediately prior to the merger closing. In addition, immediately prior to the merger closing, Hypercom Corporation divested its UK and Spain businesses to a wholly owned subsidiary of KleinPartners Capital Corp.

    “On behalf of our shareholders, I thank Hypercom's employees for a tremendous track record of success and integrity that has created significant value. The combined company should create new growth opportunities and deliver a significant opportunity for our shareholders to benefit from being owners of an even stronger global company.”
    "In fewer than four years, Hypercom has increased revenue from almost $250 million to nearly $470 million and built strong relationships with hundreds of customers in many regions across the world,” said Philippe Tartavull, Chief Executive Officer and President of Hypercom. 
    “On behalf of our shareholders, I thank Hypercom's employees for a tremendous track record of success and integrity that has created significant value. The combined company should create new growth opportunities and deliver a significant opportunity for our shareholders to benefit from being owners of an even stronger global company.”

    Hypercom Corporation
    Scott M. Tsujita, 480-642-5161
    Innisfree M&A Incorporated
    Jennifer Shotwell, 212-750-5833
    Larry Miller, 212-750-5833
    Pete Schuddekopf, 480-642-5383
    Joele Frank, Wilkinson Brimmer Katcher
    Steve Frankel, 212-355-4449
    Tim Lynch, 212-355-4449

    Spire Payments Acquires Hypercom UK and Spain

    Hypercom UK and Spain Acquired by Spire Payments

    SALISBURY, United Kingdom & MADRID--(BUSINESS WIRE)--KleinPartners Capital Corp, a private investment company, announced today that it has acquired Hypercom Spain S.A. and Hypercom UK, with Kazem Aminaee, the former President of Hypercom Europe, Middle East, and Africa.
    “We are a new European player in the electronic payments sector, and we are dedicated to delivering innovation and secure, long term growth.”
    Mr Aminaee has been appointed President of the new company, which is now called Spire Payments, and leads a business with an estimated base of 650,000 payment devices. The Company will retain all of its Spanish and UK management teams as well as nearly 200 staff and existing premises. The new business has the exclusive sale rights to Hypercom’s range of Optimum and Artema Modular products in the UK and Spain.
    Greg Klein, Chairman of KleinPartners, shared, “We are a new European player in the electronic payments sector, and we are dedicated to delivering innovation and secure, long term growth.”
    Dave Millener and Jose Maria Romero have been appointed to the positions of Managing Director, UK and Managing Director, Spain respectively. Commenting on the announcement Mr Millener commented, “It’s good news for the UK and Spanish markets and for our longstanding customers and partners. Spire Payments will provide a real and independent alternative to other payment device vendors, with reliable products and experienced and trusted teams providing the same quality of support and service that our customers have come to expect from us.”
    Spire Payments intends to harness its unique position as an experienced, independent supplier of payment solutions to further consolidate its position in the Spanish and UK markets.
    Kazem Aminaee is excited at the prospects for the company: “I’m delighted to be growing Spire Payments with the entire UK and Spanish leadership teams on board. It’s an exciting time for the payments industry and I believe that buyers of payment solutions in UK and Spain will be pleased to see the emergence of Spire Payments, a terminal vendor they know they can trust. I’m committed to ensuring that our existing and future customers continue to receive the very best products, service and support as well as our new and competitive solutions in the future.”
    About Spire Payments
    Spire Payments is an independent provider of point of sale hardware and software solutions and is one of the original pioneers of secure electronic payment systems, delivering real customer value and secure protection. The company supplies a comprehensive range of fixed, portable and mobile payment terminals, as well as PIN pads and unattended devices for integration with cash register systems and self-service kiosks. With offices in Spain and UK, and some of Europe’s top financial and retail organisations among its customers, Spire Payments has been at the forefront of electronic payments for the past 30 years. The company is committed to providing best-in-class products and services incorporating the highest levels of security at a competitive total cost of ownership. (
    About KleinPartners
    KleinPartners is a lower middle market private investment firm, founded in 1999, with the proven resources to grow companies in dynamic market sectors. The firm’s core strength is building scalable, niche market leaders. KleinPartners investments are focused in the technology, service, and manufacturing sectors. (


    Spire Payments
    Penny Mansergh, +44 1722 332255

    VeriFone Completes Acquisition of Hypercom Corporation

    Image representing VeriFone Systems as depicte...Image via CrunchBase
    SAN JOSE, Calif.--(BUSINESS WIRE)--VeriFone Systems, Inc. (NYSE: PAY) today announced the completion of its acquisition of Hypercom Corporation. In connection with the closing, VeriFone and Hypercom reached a settlement with the U.S. Department of Justice, following which Hypercom divested its U.S. payment systems business to The Gores Group, LLC.
    “VeriFone plans to grow and enhance all major product lines that existed prior to completing this acquisition, bolstered with the strong VeriFone brand identity.”
    “This strategic acquisition complements VeriFone’s position as a trusted, worldwide leader of the electronic payment industry,” said VeriFone CEO Douglas G. Bergeron. “VeriFone plans to grow and enhance all major product lines that existed prior to completing this acquisition, bolstered with the strong VeriFone brand identity.”
    The new and improved VeriFone represents tremendous geographical, and product and services diversification. Hypercom’s presence in a number of important markets enables VeriFone to accelerate overseas growth, increase innovation and build value for customers, employees and shareholders.
    VeriFone expects the acquired Hypercom business to contribute in fiscal year 2012 non-GAAP revenue of $350 million and non-GAAP fully diluted EPS accretion of 20 to 25 cents.
    Forward-Looking Statements
    Safe Harbor Statement under the Private Securities Litigation Reform Act of 1995
    This press release includes certain forward-looking statements related to VeriFone Systems, Inc. within the meaning of the Private Securities Litigation Reform Act of 1995. These statements are based on management’s current expectations or beliefs and are subject to uncertainty and changes in circumstances. Actual results may vary materially from those expressed or implied by the forward-looking statements herein due to changes in economic, business, competitive, technological and/or regulatory factors, and other risks and uncertainties affecting the operation of the business of VeriFone Systems, Inc. and Hypercom Corporation. These risks and uncertainties include whether the anticipated benefits of the acquisition can be achieved. For a further list and description of risks and uncertainties, see our periodic filings with the Securities and Exchange Commission. VeriFone is under no obligation to, and expressly disclaim any obligation to, update or alter its forward-looking statements, whether as a result of new information, future events, changes in assumptions or otherwise.
    About VeriFone Systems, Inc. (
    VeriFone Systems, Inc. ("VeriFone") (NYSE: PAY) is the global leader in secure electronic payment solutions. VeriFone provides expertise, solutions and services that add value to the point of sale with merchant-operated, consumer- facing and self-service payment systems for the financial, retail, hospitality, petroleum, government and healthcare vertical markets. VeriFone solutions are designed to meet the needs of merchants, processors and acquirers in developed and emerging economies worldwide.
    This press release may include several non-GAAP financial measures, including non-GAAP net revenues; non-GAAP cost of net revenues; non-GAAP gross profit; non-GAAP operating expenses; non-GAAP operating income; non-GAAP interest expense; non-GAAP interest income; non-GAAP other income (expense); non-GAAP income before income taxes; non-GAAP provision for income taxes, non-GAAP net income; non-GAAP net income per share as well as these non-GAAP financial measures as a percentage of net revenues.
    Management uses non-GAAP financial measures only in addition to and in conjunction with results presented in accordance with GAAP. Management believes that these non-GAAP financial measures help it to evaluate VeriFone’s performance and to compare VeriFone’s current results with those for prior periods as well as with the results of peer companies. VeriFone’s competitors may, due to differences in capital structure and investment history, record certain income and expense items, including interest, tax, depreciation, amortization, and other non-cash expenses, that differ significantly from VeriFone’s, in a manner that VeriFone’s management believes does not reflect underlying operating performance that is comparable to VeriFone’s. Management also uses these non-GAAP financial measures in VeriFone’s budget and planning process. Management also believes that the presentation of these non-GAAP financial measures is useful to investors in comparing VeriFone’s operating performance in any period with its performance in other periods and with the performance of other companies that represent alternative investment opportunities. These non-GAAP financial measures contain limitations and should be considered as a supplement to, and not as a substitute for, or superior to, disclosures made in accordance with GAAP.
    These non-GAAP financial measures are not based on any comprehensive set of accounting rules or principles and may therefore differ from non-GAAP financial measures used by other companies. In addition, these non-GAAP financial measures do not reflect all amounts and costs, such as employee stock-based compensation costs, cash that may be expended for future capital expenditures or contractual commitments, working capital needs, cash used to service interest or principal payments on VeriFone’s debt, income taxes and the related cash requirements, and restructuring charges, associated with VeriFone’s results of operations as determined in accordance with GAAP.
    Furthermore, VeriFone expects to continue to incur income and expense items that are similar to those that are eliminated in the non-GAAP adjustments described herein. Management compensates for these limitations by also relying on the comparable GAAP financial measures.
    Note A: Acquisition Related Expenses. VeriFone adjusts certain revenues and expenses that are the result of acquisitions. These adjustments include the amortization of purchased intangible assets, step-down in deferred revenue on acquisition and step-up in inventory on acquisition. These adjustments do not include the fair value adjustments relating to certain contracts acquired as part of an acquisition whereby third parties have yet to fulfill their contractual obligations. In addition, we adjust for the settlements of contingencies and true-up of balances established at the time of acquisition and other acquisition related charges (such as integration charges, certain interest charges and certain foreign currency impacts.) Acquisition related charges also result from events which arise from unforeseen circumstances which often occur outside of the ordinary course of business. Accordingly, VeriFone analyzes the performance of its operations without regard to such expenses. In determining whether any acquisition related revenue or expense adjustment is appropriate, VeriFone takes into consideration, among other things, how such adjustment would or would not aid the understanding of the performance of its operations.
    Note B: Other Charges. VeriFone excludes certain expenses that are the result of either unique or unplanned events which are noted below. It is difficult to estimate the amount or timing of these items in advance. Although these events are reflected in our GAAP financials, these expenses may limit the comparability of our on-going operations with prior and future periods.
    • Post-restatement incremental professional services fees, which include those fees that are incurred for incremental procedures for preparation, review and audit of financial information prior to remediation of any deficiencies, including material weaknesses, in our internal control over financial reporting, and to assist in remediation, are excluded from general and administrative expenses. These incremental fees enable management to conclude that our consolidated financial statements are in accordance with GAAP.
    • Restructuring charges and gain on extinguishment of debt, which result from unforeseen circumstances and typically occur outside of the ordinary course of business, are excluded from cost of net revenues and operating expenses to ensure comparability between periods.
    • Non-cash interest expense recorded relating to the adoption of ASC 470-20, Accounting for Convertible Debt Instruments That May Be Settled in Cash Upon Conversion (including partial cash settlement) is excluded to promote comparability of our non-GAAP financial results with prior and future periods and best reflects our on-going operations.
    • Income taxes are adjusted for the tax effect of excluding items related to our non-GAAP financial measures, in order to provide our management and users of the financial statements with better clarity regarding the on-going performance and future liquidity of our business.
    Because of these factors, we assess our operating performance with these amounts included and excluded, and by providing this information, we believe that users of our financial statements are better able to understand the financial results of what we consider to be our continuing operations.
    Note C: Stock-Based Compensation Related Items. Our non-GAAP financial measures eliminate the effect of expense for stock-based compensation because they are non-cash expenses that management believes are not reflective of ongoing operating results. In particular, because of varying available valuation methodologies, subjective assumptions and the variety of award types which affect the calculations of stock-based compensation, we believe that the exclusion of stock-based compensation allows for more accurate comparisons of our operating results to our peer companies. Stock-based compensation is very different from other forms of compensation. A cash salary or bonus has a fixed and unvarying cash cost. In contrast the expense associated with an award of an option is unrelated to the amount of compensation ultimately received by the employee; and the cost to the company is based on valuation methodology and underlying assumptions that may vary over time and does not reflect any cash expenditure by the company. Furthermore, the expense associated with granting an employee an option is spread over multiple years and may be reversed based on forfeitures which may differ from our original assumptions unlike cash compensation expense which is typically recorded contemporaneously with the time of award or payment.
    Note D: Non-GAAP Net Income per Share Items. VeriFone provides basic and diluted non-GAAP net income per share. The basic non-GAAP net income per share amount was calculated based on our non-GAAP net income and the weighted average number of shares outstanding during the reporting period. The diluted non-GAAP net income per share included additional dilution from potential issuance of common stock, except when such issuances would be anti-dilutive. For diluted non-GAAP net income per share, we have reduced the diluted share count for shares that would be delivered to us pursuant to hedge transactions that we believe will be effective upon conversion of the currently outstanding Senior Convertible Notes (the “Notes”) due in June 2012. Under GAAP, shares delivered to us in hedge transactions are not considered offsetting shares in the fully diluted share calculation until they are actually delivered.


    For VeriFone Systems, Inc.
    Investor Contact:
    Doug Reed, 408-232-7979
    Vice President, Treasurer and Investor Relations
    VeriFone Media Relations
    Editorial Contact:
    Pete Bartolik, 508-283-4112

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    Central Payment Achieves Highest Level of Data Security Compliance in Processing Industry

    Inc. 500 Fastest Growing Company Joins List of Industry’s Largest Providers
    SAN RAFAEL, Calif.--(BUSINESS WIRE)--Central Payment (, an Inc. 500 Fastest Growing company, today announced that it had achieved PCI Level 1 accreditation, the highest security standard level available in the payment and transaction card processing industry.
    “We stepped up and created the courses”
    Earlier in the year, the Company also announced that it had instituted a standardized sales agent accreditation process, ensuring that all of its sales partners met the highest ethical standards.
    Privately-held Central Payment, founded in 2006 by twin brothers Matthew and Zachary Hyman, had revenues in excess of $50 million in 2010 and has a growing national customer base of more than 38,000 merchants. With a network of more than 750 sales agents, the Company processes more than $3.4 billion in merchant annualized transactions.
    “While our growth rate continues to be rapid,” said Zachary Hyman, managing partner, “we also want to aggressively take the lead in pursuing ethical and security standards. These initiatives, coupled with our full range of services, have positioned us to reach record merchant acquisition and revenue levels in 2011.”
    To attain PCI Level 1 Service Provider status a company is required to undergo a stringent third party assessment, which includes more than 200 specific security requirements as well as an onsite audit.
    “We had previously achieved Level 2 status,” said Hyman, “which is all that a provider of our size is required to be. But we are committed to providing the highest level of secure systems for our merchants, so we decided to pursue the much more difficult-to-obtain Level 1 compliance status.”
    The Company took a similar course regarding agent training and certification. “We stepped up and created the courses,” said Hyman, “and required that every one of our sales partners become certified before they could make a single sale for us. That was unprecedented in our industry at the time.”
    About Central Payment Corporation
    Central Payment (“CPAY”), headquartered in San Rafael, CA, is a leading national provider of transaction processing services and was named to the Inc. 500 list of Fastest Growing Companies in 2010. CPAY provides innovative electronic technology solutions, personal service and competitive pricing to more than 38,000 businesses across the country and processes an annualized $3.4 billion in transactions.
    About the PCI Security Standards Council
    The PCI Security Standards Council is an open global forum, launched in 2006, that is responsible for the development, management, education, and awareness of the PCI Security Standards, including the Data Security Standard (PCI DSS)Payment Application Data Security Standard (PA-DSS), and PIN Transaction Security (PTS) requirements.
    The Council's five founding global payment brands -- American Express, Discover Financial Services, JCB International, MasterCard Worldwide, and Visa Inc. -- have agreed to incorporate the PCI DSS as the technical requirements of each of their data security compliance programs. Each founding member also recognizes the QSAs, PA-QSAs and ASVs certified by the PCI Security Standards Council.


    for Central Payment
    Gary Tobin, 414-256-9490

    APS Unveils Exclusive ‘Fee Free for 3’ Cashplus® Card Offer with

    APS matches the popular but now withdrawn Nationwide FlexAccount with its original no-fee policy on overseas purchases and cash withdrawals

    LONDON--(BUSINESS WIRE)--APS, provider of the Cashplus® prepaid MasterCard®, unveils an exclusive offer with allowing its visitors to get a Cashplus® card without any fees for the first three months. The offer will run from the 2nd to 20th August only and will be available exclusively through The waiving of fees will mean consumers can enjoy free purchase and no monthly fee, free ATM withdrawal both domestic and international and free foreign exchange making the Cashplus® offering more competitive than any of the other currency cards such as FairFX and matching Nationwide’s former (but now suspended) FlexAccount with its free overseas purchases and cash withdrawal policy. Although Cashplus® will cost £4.95 at the outset APS will refund this if the customer loads £250 on to it within 31 days of signing up.
    Rich Wagner, CEO APS, said, “Aside from being cited the top pick as a general spend card and a great alternative to a UK current account by, the Cashplus® offer of Fee Free for 3 months makes it also a great alternative to a currency card this summer. Pay no ATM or purchase fees in the UK or foreign exchange fees abroad for the first 3 months. Plus there are no currency exchange fees, so you won’t pay the normal 2.99% exchange rate you’d pay with most debit or credit cards. What’s more, at the end of your holiday you can continue to use your card in the UK without having to exchange money back into GBP. After the fee free period you can order free Euro and US $ cards.”
    Wagner continues, ‘We recognised how popular ‘Nationwide’s (now suspended) FlexAccount free overseas purchase and cash withdrawal offer was and have sought to give customers what they want on foreign exchange and cash withdrawals even if it is for a limited time. We are aware of the cost to run our products so we want to be upfront with customers that the card won’t be free forever but at least consumers can try it out and based on their experience we hope they find the card just as valuable as the more than 500,000 customers who have already used our card products.’


    Kezia Bibby

    Card Activation Decides to Appeal...Files Notice

    CHICAGO--(BUSINESS WIRE)--Card Activation Technologies Inc. (Pink Sheets: CDVT)—Card filed its Notice of Appeal in the United States District Court for the District of Delaware on Thursday, August 4, 2011. This is the first step toward having its appeal heard in the United States Court of Appeals for the Federal Circuit, the exclusive jurisdictions for appeals relating to patent validity and infringement issues. Card is appealing from a July adverse ruling by the Delaware Court that invalidated its Patent.
    About Card Activation Technologies Inc.
    Card Activation Technologies, Inc. is a Chicago-based company that owns the patent rights to a proprietary payment transaction method used for processing gift cards and other debit purchase transactions. The company is actively seeking to license its patent to the thousands of current users and believes that many retailers, gas stations, phone companies and others that utilize those stored value cards, such as gift and debit cards, infringe its patent. As a result, the company is aggressively pursuing litigation against these infringers.
    For further information about Card Activation Technologies go to

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    Advent International and Oberthur Enter into Negotiations for Acquisition of Oberthur's Card Systems and Identity Activities

    PARIS--(BUSINESS WIRE)--Advent International, the global private equity firm, and Oberthur Group announced today that they have entered into exclusive negotiations for the acquisition of the Card Systems and Identity divisions of Oberthur Technologies.
    “Advent benefits both from a leading international network across many regions, including Latin America, and extensive breadth of expertise in the banking and telecommunications industries via its investments in the electronic payments sector, including RBS WorldPay in the UK, Fifth Third in the United States and Cetip in Brazil.
    The Card Systems Division specialises in security based on smart card technology. It is the world’s second largest provider of security and identification solutions and services for mobile, payment, transport, digital TV, and convergence markets. Clients include mobile operators, financial institutions, transport operators and conditional access system providers.
    The Identity Division is a world leader in the manufacturing of secure identity documents, such as passports, identity cards, driving licenses and healthcare cards, and associated services for both governmental and corporate markets.
    Jean-Pierre Savare, founder of the group, and his family would retain a minority stake of about 10% in the company. The transaction would be valued at €1.15 bn. The proposed transaction requires workers’ council consultation and is subject to the approval of relevant market authorities.
    Pascal Stefani, Head of Advent International in France, said: “The Savare family has an outstanding track-record in this industry which we intend to build on. We look forward to participating in the development of a world-leading French technology business across all segments: payment, telecommunications, and identity.
    C├ędric Chateau, Managing Director with Advent International added; “Advent benefits both from a leading international network across many regions, including Latin America, and extensive breadth of expertise in the banking and telecommunications industries via its investments in the electronic payments sector, including RBS WorldPay in the UK, Fifth Third in the United States and Cetip in Brazil.
    Jean-Pierre Savare, President of Oberthur Group said: “Advent International’s expertise in technology, in particular in electronic payment, is proven. I am very confident in their ability to support the strategic growth of the Card and Identity activities. This project would be the next exciting phase in the history of our group, which would concentrate on its fiduciary activities.
    Three principal avenues for growth will support the development of the company in the coming years:
    • The electronic payment sector benefits from growth in volume driven by emerging markets, as well as new developments in mature markets
    • In telecommunications, the company presents an innovative and attractive offer which should benefit from the strong development of NFC (near field communication)
    • In the Identity Division, the company is already a well established leader in secured documents with multiple uses (citizenship, healthcare, licences, conditional access) and has strong growth potential.
    Advent International would also support the company’s growth through potential external acquisitions that may further enhance the technological development and growth of the company.
    About Advent International
    Founded in 1984, Advent International is one of the world’s leading global buyout firms, with offices in 17 countries on four continents. A driving force in international private equity for 26 years, Advent has built an unparalleled global platform of over 160 investment professionals across Western and Central Europe, North America, Latin America and Asia. The firm focuses on international buyouts, strategic repositioning opportunities and growth buyouts in five core sectors, working actively with management teams to drive revenue growth and earnings improvements in portfolio companies. Since inception, Advent has raised €19.4 billion ($26 billion) in private equity capital and, through its buyout programmes, has completed over 250 transactions valued at approximately €40 billion ($50 billion) in 35 countries.
    About Oberthur Technologies
    Oberthur Technologies is a world leader in the field of secure technologies: production of banknotes, cheques and other fiduciary documents, intelligent systems to secure cash-in-transit and ATM, systems development, solutions and services for smart cards (payment cards, SIM cards, access cards, NFC…) and for secure identity documents, traditional and electronic (identity card, passport, health care card). Oberthur Technologies has 6,800 employees through 40 countries and 65 sites. The Group posted 2010 sales of €979M.

    AuthenTec Reports Q2 2011 Results

    Image representing UPEK as depicted in CrunchBaseImage via CrunchBase

    AuthenTec Reports Second Quarter Financial Results

    MELBOURNE, Fla.--(BUSINESS WIRE)--AuthenTec (NASDAQ:AUTH), a leading provider of security and identity management solutions, today reported financial results for the second quarter ended July 1, 2011.
    • Second quarter revenue of $16.2 million exceeded guidance and was up 5 percent sequentially
    • Smart Sensor revenue grew 5 percent sequentially and 43 percent year over year
    • Embedded Security revenue grew 4 percent sequentially and 75 percent year over year
    • Forecast third quarter revenue of $18.2 million to $19.2 million and a return to non-GAAP profitability
    Revenue for the second quarter of 2011 was $16.2 million, which was above the Company’s guidance of $15.0 million to $16.0 million. Second quarter revenue included $11.3 million from Smart Sensor Solutions (SSS), and $4.9 million from Embedded Security Solutions (ESS). This compares to revenue of $15.5 million in the first quarter of 2011, which consisted of $10.8 million of SSS revenue and $4.7 million of ESS revenue, and $10.7 million in the second quarter of 2010, which consisted of $7.9 million of SSS revenue and $2.8 million of ESS revenue.
    GAAP Results:
    Under Generally Accepted Accounting Principles in the United States of America (GAAP), consolidated net loss for the second quarter of 2011 was $4.8 million, or $0.11 per diluted share. This compares to a GAAP net loss of $5.6 million, or $0.13 per diluted share, in the first quarter of 2011 and a GAAP net loss of $3.9 million, or $0.13 per diluted share, in the second quarter of 2010.
    GAAP gross margin in the second quarter of 47.8 percent was in line with the 48.0 percent in the first quarter of 2011 and compares to 51.4 percent in the second quarter of 2010. The year over year decrease in GAAP gross margin was due to increased sales mix of certain PC products acquired in connection with the UPEK transaction along with increased amortization of purchased intangibles. This impact was partially offset by higher margins in the Embedded Security Segment from increased licensing and royalty revenue in the quarter. Total operating expenses on a GAAP basis were $12.3 million, compared to $12.6 million in the first quarter of 2011 and $10.1 million in the second quarter of 2010. The $0.3 million sequential decrease in operating expenses was due to lower Selling and Marketing, General and Administrative and restructuring costs, which were slightly offset by higher R&D spending in the quarter.
    Non-GAAP Results:
    On a non-GAAP basis, consolidated net loss for the second quarter of 2011 was $1.9 million, or $0.04 per diluted share, which exceeded the Company’s guidance of a non-GAAP loss of $0.05 to $0.07 per share. Non-GAAP results exclude certain legal and other costs as well as stock-based compensation, the amortization of acquired intangible assets and severance. The second quarter loss compares to a non-GAAP net loss of $2.6 million, or $0.06 per diluted share, in the first quarter of 2011 and a non-GAAP net loss of $2.5 million, or $0.08 per diluted share, in the second quarter of 2010.
    Non-GAAP gross margin in the second quarter was 53.7 percent, compared to 52.6 percent in the first quarter of 2011 and 54.6 percent in the second quarter of 2010. The sequential increase in gross margin was due primarily to the higher mix of Government and Access Control revenue and the year-over-year decrease can be attributed to increased sales mix of certain PC products in the Smart Sensor business in the quarter.
    Total operating expenses on a non-GAAP basis were $10.4 million, which were in line with the first quarter of 2011 and up from $8.3 million in the second quarter of 2010. Operating expenses reflect higher R & D expenses within the Embedded Security business partially offset by lower General and Administrative expenses in the quarter. A reconciliation of second quarter GAAP to non-GAAP results is provided in Table 2 following the text of this press release.
    As of July 1, 2011, AuthenTec had approximately $20.2 million in cash and investments, compared to $24.4 million in cash and investments at the end of the first quarter of 2011. AuthenTec had no debt as of July 1, 2011 and April 1, 2011.
    Business Update:
    “Our strong second quarter results reflect continued growth across both of our business segments, driven by increased demand for our portfolio of mobile and network security solutions. This growth, combined with the cost synergies realized as a result of the UPEK acquisition, contributed to revenue and EPS exceeding our guidance for the quarter,” said AuthenTec CEO Larry Ciaccia.
    “During this past quarter, we increased sales of our TrueSuite identity management software which is now being shipped on HP consumer notebooks and is available on our new Web store. As the year continues, we expect versions of our software to be integrated on many more consumer notebook models. Also during the quarter, we secured several new sensor design wins for both the remainder of 2011 and into the 2012 production cycle, including a new laptop design win from a major OEM that should start volume production later this year.
    “In our Embedded Security business, we posted our fifth consecutive quarter of sequential revenue growth while also securing new customer wins in mobile and network security applications. Our products now provide security from the device to the cloud by securing data and communications, and by protecting content and streaming programming. Highlighting these expanding capabilities in mobile security, our content protection services are being utilized in the popular HBO GO® application which has registered nearly 4 million downloads on iPhones, iPads and Android phones. During the quarter we also secured additional design wins around our IPsec solutions for VPN applications on mobile phones. At the device level, we announced new wins in the quarter with semiconductor chip providers who are incorporating our SafeXcel™ security engines in new gateway and multi-core processor chipsets. Companies are integrating our IP security (IPsec) into new chip designs to enhance the security and high-speed networking compatibility of their offerings.
    “To leverage what is expected to be a growth opportunity for our sensors in Near Field Communication (NFC)-based mobile commerce, we recently joined forces with several of the leading technology providers in the NFC mobile payment space. This week we announced collaboration with NXP and DeviceFidelity to create secure NFC mobile payment solutions, one of which was used to complete the first biometrically-enabled NFC mobile payment transaction in the U.S. We believe AuthenTec-enabled NFC reference designs created through these and other development efforts will help mobile phone OEMs and wireless carriers address the tremendous growth opportunity as the mobile payment ecosystem continues to mature.”
    Business Outlook:
    Mr. Ciaccia concluded, “For the third quarter, revenue is expected to sequentially increase 12 to 18 percent to a range of $18.2 million to $19.2 million. I am pleased to note, given this continued growth and cost management, we also expect to achieve non-GAAP profitability during the third quarter. Non-GAAP operating expenses are expected to be in a range between $9.7 million and $10.3 million. We exceeded our goal of achieving $10 million in annualized cost synergies with full realization of those synergies expected in the third quarter. Looking ahead, I am very excited about the opportunities before us. Our unique portfolio of solutions address growing markets around mobile and network security, and we strongly believe that AuthenTec is on the right course for revenue growth, profitability and continued success in the second half of 2011.”
    Second Quarter 2011 Financial Results Webcast and Conference Call:
    AuthenTec will host a conference call to discuss its second quarter financial results and other information that may be material to investors at 5:00 p.m. Eastern Time (ET) today, August 4, 2011. Investors and analysts may join the conference call by dialing 800-215-2410 and providing the participant pass code 83712978. International callers may join the teleconference by dialing +1-617-597-5410 and using the same pass code. A replay of the conference call will be available beginning at 8:00 p.m. ET and will remain available until midnight ET on Thursday, August 11, 2011. The U.S. replay number is 888-286-8010, with a confirmation code of 96242881. International callers should dial +1-617-801-6888, with the same confirmation code. A live web cast of the conference call will be accessible from the Investor section of the Company's web site at Following the live webcast, an archived version will be made available on AuthenTec’s web site.

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