Is Concurrent Vulnerable to a Takeover?
Skellig Capital Management LLC, which holds about 5 percent of Concurrent shares, claims such a sale would prevent the video-on-demand (VoD) vendor from reaping the benefits of its cross-platform video and advanced advertising strategy.
Skellig made its feelings known Tuesday in a Securities and Exchange Commission (SEC) filing urging Concurrent to apply its cash reserves of $31.4 million (as of June) to a share buyback program and to put the idea up for discussion at the annual shareholder meeting on Oct. 26.
The filing follows a letter Skellig sent to Concurrent's board of directors, company chairman Steve Nussrallah, and CEO Dan Mondor on July 28, holding that the future for its video server and analytics and advanced advertising products (obtained for $15 million via its 2005 acquisition of Everstream Holdings Inc.) appear to be bright, but that "Concurrent is overcapitalized" and its stock "severely undervalued." (See Concurrent Acquires Everstream.)
Skellig contends that Concurrent shares should be trading at more than $10 per share. The stock closed at $6.80 Wednesday, within pennies of its 52-week high.
Skellig dismisses theories that Concurrent is too small a company to continue on its own, putting it at risk of losing deals as operators move on to their next wave of deployments. Such perceptions, the firm said, may make investors reluctant to buy stock in the company.
"There is merit in conserving cash to reassure customers that you will be around for the long run, but setting too much cash aside for a rainy day sends investors the message that you see gray clouds on the horizon," the firm warned. "More importantly, Concurrent runs the risk of losing control of its business as the result of being acquired with its own cash at an unfavorable price."
Concurrent has been the subject of acquisition rumors in recent years. Such chatter has all but dried up lately, but Skellig wants Concurrent to protect itself regardless.
"We're saying, 'Put a little more tension in your balance sheet,'" Skellig founder Robert Neal tells Light Reading Cable.
Concurrent's spending lately has been relegated to whatever change happens to be rattling around in its pockets. Of recent note, when Concurrent struck a deal to buy the assets of startup TellyTopia Inc. , the financial terms were labeled "immaterial." (See Concurrent Buys Over-the-Top Shop .)
Concurrent declined to comment on Skellig's suggestions.
Skellig is the latest investor to start chirping at a VoD company. Earlier this month, a firm that holds 8.9 percent of SeaChange International Inc. (Nasdaq: SEAC) and is unhappy about that company's financial performance urged the board to separate the roles of chairman and CEO, currently held by Bill Styslinger, and to revisit the idea of selling off SeaChange's video server business. (See Shareholder Puts SeaChange's Feet to the Fire .)
— Jeff Baumgartner, Site Editor, Light Reading Cable