Fingerprint Loses Nearly a Third of Value After Profit Warning

Fingerprint Cards AB issued its fifth sales or profit warning in 15 months as the Swedish maker of biometric sensors cautioned investors that earnings in the last quarter were lower than expected. The stock fell by almost a third in Stockholm.

The company now sees revenue in the three months ended December slumping 62 percent to 615.3 million kronor ($77.8 million), from 1.62 billion kronor a year earlier, according to a statement on Thursday. That compares with an average analyst estimate of 703 million kronor.

In the past 18 months, Fingerprint has faced both growing competition and pricing pressure for sensors for mobile phones, and weakening demand and inventory build-up among customers. Last year, it scrapped dividend plans and the stock, which was once a darling of day traders, has taken investors on a roller-coaster ride, highlighting the boom-and-bust nature of technology cycles. The shares have declined more than 90 percent since reaching a high of 135 kronor in December of 2015.

“This is another confirmation that the market for fingerprint sensors has deteriorated and how hard it is to sustain margins above about 30 percent,” Carnegie said in a note to clients. “We expect there is further downside from here.”

Fingerprint said revenue was hit by a weak market and continued negative price development in capacitive sensors, used in one type of touchscreens. It estimates that the Chinese smartphone market worsened further during the quarter and said it sees revenue remaining weak this quarter. To address those challenges, the company is cutting costs and jobs, reducing its workforce of employees and consultants by one-third.

“To structurally improve profitability, Fingerprint has initiated a cost-reduction program and as part of this approximately 185 positions are made redundant,” the company said in a statement. It’s reducing external costs, mostly consultants, but also those related to its own employees, it said.

Competition and price pressure in the fingerprint-sensor industry for mobile phones have prompted the Swedish biometrics company to scan for other technologies and products to secure future growth. It’s banking on smartcards with fingerprint sensors as well as on iris recognition technology it has recently acquired.

The company forecasts an operating loss of 40.6 million kronor, compared with a profit of 520 million kronor a year earlier, it said.

The stock fell as much as 31 percent in Stockholm, the steepest decline since March 2017. The stock was the biggest gainer in Europe in 2015, peaking at a market value of 42.7 billion kronor in December that year. It has since erased almost all those gains, and the company is now valued at 3.89 billion kronor. The stock was down 24 percent to 12.70 kronor at 10:21 a.m.

Fingerprint forecasts that its gross margin more than halved to 21 percent in the fourth quarter, a decline primarily attributable to a worsened product mix and an inventory provision of 58.9 million kronor. It’s set to report final earnings on Feb. 9.