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Backhaul

Carrier Access Gets Scoffer Offer

Carrier Access Corp. (Nasdaq: CACS) is still up for sale, and one of its shareholders, Michael Goldman, says he knows what's best for the firm. Goldman sent a letter to Carrier Access this morning, offering to buy the telecom equipment vendor for $3.40 a share.

Goldman's letter, also sent to Light Reading, says the offer would value the company at $117.64 million. That's quite a bit lower than some earlier reported offers, but not surprising given recent events that have sent Carrier Access's share price down below $3.

Officials at Carrier Access did not return calls for comment this morning.

Carrier Access is trading up $0.31 (11.57%) to $2.99 in early afternoon trading on Friday. This after the stock was deemed, on Wednesday, to be one of "the worst stocks in the world" by the investor Website, Motley Fool.

"We do think $3.40 is a fair preliminary offer for us to make based on the current stock price," Goldman writes in an email to Light Reading. "However, if there are better offers out there, we will certainly have to take another look at our offer after completion of our due diligence."

Goldman says he and his affiliates -- which include two hedge funds -- own 750,000 shares of Carrier Access common stock, about 2.2 percent of the outstanding shares.

In recent weeks, several hedge funds sources have told Light Reading that they're calling frequently and encouraging the management of Carrier Access to find a buyer quickly. (See CACS Update.) They also want the company managers to disclose what offers it has received; Goldman's offer appears to be just such a gambit.

It's easy to see why large shareholders are looking to eke value out of their Carrier Access holdings. The firm's competitive position is weakening, and word came this week that one of Carrier Access's only noteworthy partnerships -- the one with Tellabs Inc. (Nasdaq: TLAB; Frankfurt: BTLA) -- hasn't yet produced a working product.

Goldman says the relationship Carrier Access has with AT&T Inc. (NYSE: T) and its technology potential in emerging markets are some reasons to consider Carrier Access more valuable than its current stock price. "Selling the company's wireless assets and IP to a strategic buyer would certainly get priority consideration," he says.

But those watching the tech side of the telecom industry say any technology advantage Carrier Access has in wireless backhaul isn't going to last. "The mobile backhaul market is absolutely a growing market opportunity, but it's also one that's drawing a lot of competition," says Patrick Donegan, Heavy Reading's wireless analyst. "Carrier Access has an existing footprint in the U.S, including with AT&T, but so do a lot of other vendors such as Adtran Inc. (Nasdaq: ADTN). Then there are a bunch of other vendors drawn to the Ethernet access market that are bringing competition in terms of both product and pricing."

Then there's that issue of the integrated product. Back in 2005, Carrier Access and Tellabs said they would produce a product that "integrates Carrier Access' innovative and patent pending FLEXengine technology with the industry-leading Tellabs 5500 digital cross-connect system..."

So far, the combo effort hasn't given Carrier Access a boost. "We have not yet released a product with Carrier Access," writes a Tellabs spokeswoman in an email reply to Light Reading today.

Since November 2, 2006, Carrier Access shares have lost 59 percent of their value. Its shares haven't cracked the $10 mark since December 2004. Carrier Access has been "exploring strategic alternatives" since its two founders stepped away from their leadership roles back in late July. (See CACS 4 Sale.)

— Phil Harvey, Managing Editor, Light Reading
twill009 12/5/2012 | 2:59:33 PM
re: Carrier Access Gets Scoffer Offer LR, is this journalism? What are the names of the purported hedge funds Goldman is working with?

If i send you a letter saying i am offering xx% more than the current price for a stock i own, will you run a story saying the company is in play?

You are being used, unless you are just desperate to draw traffic to your site. Shoddy.
DCITDave 12/5/2012 | 2:59:32 PM
re: Carrier Access Gets Scoffer Offer re: "LR, is this journalism? What are the names of the purported hedge funds Goldman is working with?"

Yes. Abbott Capital is one firm Goldman's affiliated with. He'll probably disclose the others soonish.

re: "If i send you a letter saying i am offering xx% more than the current price for a stock i own, will you run a story saying the company is in play?"

No, we wouldn't. But you're welcome to try.

re: "You are being used, unless you are just desperate to draw traffic to your site. Shoddy."

How are we being used exactly? We're publishing something that's going to be public record in a matter of days anyway. And our analysis of the company is that its prospects aren't great -- and I don't think that favors anyone trying to turn a buck on its stock.

ph
carrier12 12/5/2012 | 2:58:45 PM
re: Carrier Access Gets Scoffer Offer Shareholders need to really get on the back of the CEO and CFO and the board. Everyone needs to make their phone calls and emails and keep showing these executives its all about shareholder vale and they are waiting way to long to sell this company, why burn cash, they should take what they can get, if they can get $5-$6, then sell now!, what are you waiting for, it's amazing how this board is acting, moving like snails, wasting cash, this board really needs a wake up call!!
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