Fingerprint Cards suffers fresh setback with weak outlook

[February 02, 2017]  STOCKHOLM (Reuters) - Former stock market star Fingerprint Cards (FPC) reported earnings below expectations and gave a bleak outlook for the start of the year, dealing further blows to the Swedish biometrics company.

Shares dropped as much as 8 percent on Thursday after falling 15 percent so far this year, with the departure of a board member last month following alleged unauthorized disclosure of inside information also weighing.

FPC said it expected first-quarter revenues to be "materially weaker" than a year ago because of an inventory build-up in the supply chain, a component shortage affecting its customers and growing competition.

The firm did provide some solace for investors by proposing a dividend of 2 crowns per share for 2016. It said dividend over time should at least equal 30 percent of net profit.

It stuck to its revenue guidance for the year as a whole but critics questioned whether it could regain lost ground.

"I don't see how FPC will manage to reach its full-year revenue guidance given the weak start of the year," said Inge Heydorn, fund manager at Sentat Asset Management, who holds a short position in FPC shares.

The 20-year-old Swedish firm had its big breakthrough in 2015 when demand for fingerprint sensors in smartphones and tablets soared after other manufacturers followed the lead of Apple, which bought its own sensor maker, AuthenTec, in 2012.

FPC's share price surged around 1,600 percent in 2015 due to soaring demand from smartphone makers, but declined almost 50 percent last year as competition increased.

A person uses a sensor for biometric identification on a smartphone in Berlin, Germany October 16, 2015. REUTERS/Fabrizio Bensch

CEO Christian Fredrikson told Reuters he expects a market share above 50 percent in 2017, down from between 55 and 60 percent in 2016, with dual sourcing -- smartphone makers which seek more than one supplier -- an important reason.

FPC has 20-30 competitors globally and its main rivals include Goodix, Silicon Valley-based Synaptics and Taiwan's Egis Technology.

The company posted an operating profit of 548 million Swedish crowns ($63 million), lower than the 620 million seen by analysts in a Reuters poll, but up from 518 million in the year-ago quarter.

FPC repeated its 2017 full-year revenue guidance of between 7.5 to 9.5 billion crowns.

Analysts had on average expected 2017 revenue of 7.9 billion crowns as a surprise profit warning for 2016 in December dented confidence in the company's forecasts.

(Reporting by Olof Swahnberg and Helena Soderpalm)

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