06-25-2013, 07:19 AM
Well, this went down with the rest of the market today (Monday Jun 24), just bigger (6%+), but NIA sees a bright side, not surprisingly..
It also turns out they're selling when you're not looking, or telling you quite something else at the time.
This past Thursday when the Dow Jones was down 350 points, NIA felt there was a chance that Concurrent (CCUR) would make a brief dip to fill in the gap from June 7th following CCUR's 100% dividend increase announcement - when CCUR opened up at $7.60 after reaching a high the previous day of only $7.22. Therefore, NIA sold 20,000 of its 250,093 shares this past Thursday, so that it would have cash to buy back shares in the event CCUR did fill in this gap.
NIA was right, CCUR filled in the gap today, which is extremely healthy for the stock. The only reason CCUR didn't rise higher than $8.10 last week and breakout towards double digits is the fact that it needed to fill in the gap. NIA has already purchased back 5,000 shares of CCUR today! Now that the gap has been filled in, CCUR should very quickly explode past $8.10 in the days ahead!
Cisco Systems (CSCO) entered the on demand video delivery space on August 22nd, 2006, when CSCO acquired VOD start-up Arroyo Video for $92 million in cash!
Concurrent (CCUR) at the time was trading for $15.60 per share with 7.225 million shares outstanding, a market cap of $112.58 million, $14.423 million in cash, $1.583 million in debt, and an enterprise value of $99.74 million. CCUR was trading with an enterprise value/revenue ratio of 1.39.
Seachange (SEAC) at the time was trading for $7.08 per share with 29.01 million shares outstanding, a market cap of $202.6 million, $29.37 million in cash, no debt, and an enterprise value of $173.29 million. SEAC was trading with an enterprise value/revenue ratio of 1.17.
CCUR in August of 2006 was trading with an enterprise value/revenue ratio of 1.39, and CCUR was losing money with a trailing GAAP EPS loss of ($1.70) per share and negative free cash flow (FCF) of ($7.99 million). Today, CCUR has pulled off an amazing turn around, and the company now has a trailing GAAP EPS profit of $0.25 per share and positive FCF of $5.6 million! Yet, CCUR is currently trading for only $7.20 per share, down 54% since August 22nd, 2006, and CCUR is currently trading with an insanely low enterprise value/revenue ratio of only 0.65!
SEAC in August of 2006 was trading with an enterprise value/revenue ratio of 1.17 and had a trailing GAAP EPS loss of ($0.29) per share and negative free cash flow (FCF) of ($30.17 million). SEAC has also pulled off a major turn around, and the company now has a trailing GAAP EPS profit of $0.01 per share and positive FCF of $13.6 million!SEAC closed last week at $11.57 per share, up 63% since August 22nd 2006, andSEAC is now trading with a much higher enterprise value/revenue ratio of 1.69!
CCUR's turnaround since August of 2006 has been much larger than SEAC's turnaround, yet CCUR's enterprise value/revenue ratio has declined from 1.39 down to 0.65, while SEAC's enterprise value/revenue ratio has increased from 1.17 up to 1.69!CCUR had a higher enterprise value/revenue ratio than SEAC in August of 2006 - andCCUR has much higher profit margins and EPS than SEAC today - yet amazinglySEAC is now trading with an enterprise value/revenue ratio that is 2 1/2X higher thanCCUR!
CSCO paid $92 million for Arroyo in 2006 when CCUR's enterprise value was $99.74 million. Most likely, if CSCO decided to acquire established CCUR in 2006 instead of start-up Arroyo, they would've ended up paying a 50% to 100% premium over CCUR's then enterprise value of $99.74 million.
CCUR as of August 2006 had shipped MediaHawk servers with a total capacity of 954,741 streams. Four years later in August of 2010, CCUR had shipped MediaHawk servers with a total capacity of 2.1 million streams. This means CCUR shipped 1.15 million streams over a four year period, which equals about 287,500 streams per year!
It was announced in August 2010 that CSCO over the previous four years had shipped servers with total capacity of 600,000 streams. This means CSCO during the same four year period only shipped 150,000 streams per year. During CSCO's first four years in the VOD space after acquiring Arroyo for $92 million in cash, CCUR shipped 92% more streams!
Shockingly, the whole entire enterprise value of CCUR here at $7.20 is only $40.66 million! That's 55% below the $92 million that CSCO paid to acquire VOD start-upArroyo, and CCUR shipped 92% more streams than CSCO! In NIA's opinion, CCURin the event of a buyout could potentially fetch an enterprise value that is 92% above $92 million, which would give CCUR an enterprise value of $176.64 million and valueCCUR at $22.73 per share!
NIA strongly believes the absolute minimum enterprise value CCUR should immediately be trading at is $92 million (matching CSCO's purchase price for Arroyo), which would value CCUR at $13.06 per share with an enterprise value/revenue ratio of 1.46. That would be only slightly higher than CCUR's enterprise value/revenue ratio in August 2006 of 1.39, when CCUR today has positive FCF of $5.6 million vs. negative FCF in August 2006 of ($7.99 million)!
CCUR's dividend yield here at $7.20 is an ENORMOUS 6.67%! We will most likely NEVER see a technology stock with HUGE short-term upside potential paying a dividend yield this BIG ever again!
NIA is not an investment advisor and is not making any target prices or financial projections. Never invest based on anything NIA says. Always do your own research and make your own investment decisions. NIA never recommends to buy or sell any stock.
Disclaimer: NIA currently owns 235,093 shares of CCUR. NIA intends to sell its CCURshares in the future and can do so anytime. NIA reserves the right to add to its CCURposition at any time.
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