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Tech company to buy HP's VeriFone

Gores Technology Group plans to acquire the e-payment company from Hewlett-Packard, which said last year it was looking to sell the business.

A technology buyout company said Thursday it plans to acquire VeriFone, a division of computing giant Hewlett-Packard.

Los Angeles-based Gores Technology Group said it wants to add VeriFone to its portfolio of tech companies. VeriFone provides e-payment products for companies and financial institutions.

Terms of the deal were not disclosed.

In December, HP Chief Executive Carly Fiorina said the company would be selling its VeriFone software business. VeriFone had a loss of $48 million for the year, including $29 million in restructuring charges, which had contributed to HP's poor third-quarter results.

The comments from Fiorina came as Palo Alto, Calif.-based HP said it would focus its operations this year on servers and storage systems, which provide higher profit margins.

VeriFone and Gores are working to ensure that any disruptions of service, product shipments or changes to business relationships will be avoided, Pierre-Francois Catte, VeriFone general manager, said in a statement.

He added that VeriFone plans to retain all existing employees.

"VeriFone could not have asked for a better company to pair up with for the future," Catte said. "We consider this a return to VeriFone's roots as a nimble, entrepreneurial, stand-alone technology company with the freedom to innovate and grow."

The computing

Gartner analysts Susan Landry and Annemarie Earley say Gores' adoption of VeriFone provides an opportunity for the HP division to fare better than its cousin CyberCash, which recently filed for bankruptcy.

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giant acquired VeriFone in a $1.2 billion stock-swap deal in 1997. VeriFone's e-payment systems allow secure transactions by companies.

HP, like a number of other technology companies, is in cost-cutting mode. Last month, the company announced it would slash up to 3,000 jobs and said its second-quarter results would fall below Wall Street's expectations.

HP said its second-quarter earnings would drop to 13 cents to 17 cents a share, compared with the profit of 35 cents that analysts had estimated. The company's revenue is anticipated to fall 2 percent to 4 percent below its first-quarter performance, while Wall Street had expected it to climb.

VeriFone will mark the latest technology acquisition Gores has made this month. Gores announced plans to purchase Micron Electronics' PC division just 10 days ago. And in September, the buyout company purchased software maker The Learning Company from toy giant Mattel, and in March resold it to a French software maker.

"We are confident that, working with VeriFone management, we can capitalize on its strengths and maximize its potential for growth," Doug Bergeron, a Gores vice president, said in a statement.