February 15, 2019 / 8:32 AM / 6 months ago

Fingerprint Cards suffers as smartphone users delay upgrades

STOCKHOLM (Reuters) - Swedish biometrics firm Fingerprint Cards (FPC) plunged to an unexpected fourth quarter loss and warned of a hit to sales this quarter as smartphone users hold onto their handsets for longer.

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

Shares in the company, which competes against China’s Goodix, Synaptics in the United States and Taiwan’s Egis Technology, fell as much as 10 percent in early Friday trading.

FPC made its break-through in 2015 as demand for fingerprint sensors in smartphones and tablets soared.

But it reported an operating loss of 26 million crowns ($2.7 million) in the last quarter of 2018. The mean forecast in a Reuters survey of three analysts had been for a 7 million crown profit. Sales were down 31 percent.

“I expect the situation in the global mobile market to remain challenging, which will have an impact on Fingerprints’ sales performance in the first quarter of 2019,” CEO Christian Fredrikson said in a statement. “Q1 is also generally a seasonally weak quarter”.

Users of smartphones, FPC’s largest market, are replacing devices less often than before, Fredrikson said, a trend that has also hit retailers such as Britain’s Dixons Carphone.

After plunging from record highs in 2015 amid growing competition and price pressure, FPC’s stock had gained around 70 percent this year up to Thursday’s close. The shares were down 6 percent at 16.10 crowns at 0840 GMT.

Fredrikson told Reuters he saw the biometric smartphone market increasing in value from the second half of 2019, helped by the launch of more expensive in-display optical sensors.

FPC reached its goal in 2018 to generate 10 percent of sales outside fingerprint sensors for smartphones. Fredrikson reiterated he saw the market for biometrics linked to payment cards taking off in 2020.

“The market is much more optimistic than our base case of 8 crowns per share so fundamentally shares should open at least down 10 percent,” Redeye analyst Viktor Westman said in a note.

“However, as we believe that almost all focus have shifted towards smart cards the stock market could be reasonably forgiving regarding the weak margins.”

Reporting by Olof Swahnberg, Editing by Subhranshu Sahu and Mark Potter

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