What course of action will Gemalto take to regain stability in years to come?
International digital security company, Gemalto, has suffered a second fall in share price this year, this time dropping by over 16 percent.
The continued instability has resulted in the issuance of three profit warnings spanning the last four months, indicative of increasing turbulence.
In the most recent warning, delivered on Friday, Gemalto outlined its struggling removable sim business as the reason for a 420 million euro reduction in the estimated asset value. The technology has lost ground in the market to more advanced processes.
In the second quarter Gemalto has warned a revenue fall that would drag it down to 742 million euros; this comparison is based on the figures of the same in the previous year.
Forecasts are not looking any brighter either, as the company’s payments business in the US is also contributing to adverse financial results. In light of this, Gemalto has predicted continued a continued decline for the remainder of the year.
Losses in these areas have been a significant blow for the company, despite having branched out into providing security software.
There have been major movements within the payments space recently, with the $10 billion purchase of UK leader WorldPay, being carried out by Vantiv, a US firm. Due to this, takeover speculation may also be to blame for the languid stock market performance.
Despite the bleak outlook for the year ahead, Gemalto managed to place on par with its first half profit expectations at 93 million euros.
Other companies have found themselves encircled by potential buyers in line with this same trend, with Danish payment firm, Nets A/S, announcing that it had been approached, with observers attributing the interest to Visa or Mastercard.
Another company facing downward financial trajectory due to weakening grip on the market is tech giant IBM, suffering the debilitation of legacy elements of the business, and finding it difficult to break into popular cutting edge areas.