Register for free to join our community of investors and share your ideas. You will also get access to streaming quotes, interactive charts, trades, portfolio, live options flow and more tools.
Register for free to join our community of investors and share your ideas. You will also get access to streaming quotes, interactive charts, trades, portfolio, live options flow and more tools.
The stated price for the Intelligent Bandwidth Management (IBM - LOL) segment at 18.7 million works out to a little over .60 per share based on the stated number of outstanding shares in the recent 10K. Hopefully, the IQStream segment is worth a lot more, and they are able to keep the final total value to shareholders above $6. Of course, we haven't heard from any bloodthirsty trial lawyers....... yet.
Eurosion?
Euro-Area Recession Deepens as Manufacturing Shrinks: Economy
http://www.bloomberg.com/news/2012-10-24/euro-area-services-manufacturing-shrink-more-than-forecast-1-.html
Well, this is a fine kettle of fish! They're winding down and dissolving the company, with $2 per share payout on November 12th and additional payouts at later date(s) as warranted! Will this move actually be in the best interest of current shareholders? Today's action in SCMR should be interesting, to say the least, and we should quickly get some sense of just how much value knowledgeable parties place on the assets being put up for sale. Hold on to your hats, this ride could get bumpy today.
Sycamore Networks Inc SCMR:NASDAQ
Sycamore Networks Signs Definitive Agreement to Sell
Intelligent Bandwidth Management Business and Announces
Intent to Wind Down Remaining
Operations
BusinessWire
3:14 PM ET
Sycamore Networks, Inc. (NASDAQ: SCMR), today announced
that it has signed a definitive asset sale agreement
to sell substantially all of the assets of its
Intelligent Bandwidth Management business to a
subsidiary of Marlin Equity Partners ("Marlin") for $18.75
million, subject to certain adjustments and the
assumption by Marlin of certain liabilities. The
closing of the asset sale, which is subject to
stockholder approval and other customary closing conditions,
is expected to occur no later than the first quarter
of calendar year 2013.
Under the terms of
the definitive asset sale agreement, Marlin will
acquire substantially all of the assets of the Company's
Intelligent Bandwidth Management product and service
business, all support operations, and the Company's
research and development center in Shanghai, China.
Marlin has agreed to make offers of employment to
substantially all of the employees of the Intelligent
Bandwidth Management business as of the closing of
the asset sale. The Company's Intelligent Bandwidth
Management product portfolio includes optical
networking and multiservice access products, which are
widely deployed in a global customer base that
includes Tier 1 service providers, government
agencies, utility operators, and large financial
enterprises. Upon the closing of the asset sale,
John Scully, vice president of worldwide sales and
support at the Company, will assume the role of
president and chief executive officer of the new Marlin
entity.
The Company also announced that
it is accelerating its pursuit of strategic
alternatives for IQstream(R), which may include an asset
sale or other business combination transaction, or
the discontinuation of the marketing and development
of IQstream. The Company further announced that in
the near term it will take certain cost reduction actions
associated with its IQstream business, including
workforce reductions and other cost containment
measures.
The Company also announced that
its Board of Directors has approved the liquidation
and dissolution of the Company pursuant to a Plan of
Liquidation and Dissolution following the completion of the
asset sale. The Plan of Liquidation and Dissolution
contemplates an orderly wind down of the Company's
business affairs, which will include the disposition
of the IQstream business to the extent those assets are not
sold prior to the filing of the certificate of
dissolution. The Plan further contemplates the sale
or monetization of the Company's other remaining
non-cash assets, the satisfaction or settlement of its
liabilities and obligations, including contingent
liabilities and claims, and additional distributions
of any remaining cash to the Company's stockholders.
If the dissolution of the Company is approved, the
Company also intends, following the filing of a certificate
of dissolution, to close its stock transfer books
and to discontinue recording transfers of its common
stock.
On October 22, 2012, the Board of
Directors of the Company also approved a special
cash distribution of $2.00 per share of common stock, which
will be paid on November 12, 2012 to stockholders of
record as of November 2, 2012. In accordance with
NASDAQ Rule 11140(b), the ex-dividend date will be
November 13, 2012, the first business day following
the payment date for the cash distribution.
"After careful consideration of the
Company's strategic alternatives, we believe these
actions are in the best interests of Sycamore's
stockholders, as well as its customers and employees," said
Daniel E. Smith, president and chief executive
officer, Sycamore Networks. "We are pleased with
Marlin's decision to acquire our Intelligent Bandwidth
Management business operations, which will provide for
continued support of our global customer base."
Both the asset sale and dissolution are
subject to stockholder approval. The Company intends
to file a proxy statement with respect to a special
meeting of the Company's stockholders to seek stockholder
approval for each of the sale of the assets of its
Intelligent Bandwidth Management business and the
dissolution of the Company pursuant to the Plan of
Liquidation and Dissolution following the completion of the
asset sale and a final determination regarding the
Company's IQstream business. The Company's Board of
Directors unanimously approved the sale of the assets
of the Intelligent Bandwidth Management product and service
business to Marlin and the dissolution of the
Company and recommends that the Company's
stockholders vote in favor of the asset sale and the
dissolution.
Blackstone Advisory Partners
acted as financial advisor to the Company.
The company paid out a special $10 dividend on October 12, which was more than 25 percent of the stock price prior to payment of the dividend. By stock exchange rules the stock price is adjusted on the ex-dividend date to reflect the amount of the large dividend paid. Of course, the stock price quickly goes up or down from there, depending on the level of market confidence in the ability of the company to succeed. A few well known analysts have indicated a higher valuation than the price at which the stock is currently trading.
European Twits: The EURO slops here!
Europe pushes ahead towards ECB bank supervision
http://www.foxbusiness.com/news/2012/10/19/europe-pushes-ahead-towards-ecb-bank-supervision/
Sal Pulello update at Philly.com
http://www.philly.com/philly/video/VideoArchive.html?vgenre=g=mob-scene
Business Outlook
As global economic prospects changed during 2012, proposals and commitments increased due to the need for improved security levels while reducing manpower and maintenance costs. Currently, proposals for new orders continue to grow. However, our historical results have taught us that the release of funds that support proposals may never be forthcoming. Furthermore, as is customary in the security industry, our contracts are subject to cancellation or delay at any time with little notice or penalty. Government based purchase orders which are subject to legislative appropriations are particularly sensitive to economic and political conditions. Thus, we cannot be certain of the total realized value and revenue which we will generate from proposals and committed orders. We expect to receive releases and task orders for a significant portion of our contract commitments within the next twelve months, although we cannot be certain that we will complete any or all of such orders within the anticipated time frame.
The security industry as a whole has changed. The security market historically has been a product oriented opportunity for manufacturers, both within the United States and internationally. The difficulty the industry traditionally faced has been the ability to develop a standard security platform that would permit systems integrators to design a seamless interface between the multiple products and subsystems required to address threats in high-security environments. The Company has developed a platform that addresses seamless integration of multiple technologies including legacy and government-furnished equipment. We expect this trend to continue for the foreseeable future, since the demand for integrated platforms has become a necessity.
Discussion of Results, Business Outlook and Identifiable Industry Trends
Spending in the security industry has decreased over the last year as the U.S. Congress has continued to reduce funding homeland security initiatives, including Department of Energy and Department of Defense programs. We expect this trend will continue for the foreseeable future. The Company has pursued more Small Business and international opportunities to offset this reduction. As a result, the level of new proposals continues and our committed backlog, including awards for the U.S. Navy, U.S. Air Force, nuclear power stations, and international projects is one of the largest in our history. We cannot, however, assure you that we will complete any or all of the orders comprising our backlog within the anticipated time frame. Our experience has taught us that all of these anticipated releases and new contracts are subject to cancellation or delay, thus we cannot be certain of the total realized revenue amount of our backlog and do not reference the total dollar amount of our present backlog or submitted proposals.
Our sales dependency has continued to shift from our President and Chief Executive Officer, Arthur Barchenko, to marketing and sales representatives, program and project managers to meet our revenue objectives. During the last year, we continued to mitigate the concentration of sales efforts by (i) engaging independent sales representatives to market our products and generate sales opportunities and (ii) expanding sales efforts through dealer-installers and system integrators in geographic regions on which we have not focused our resources in years past such as Latin America, Egypt and the Middle East, China and Africa, where we are developing projects that management believes will result in ongoing revenue.
During the Fiscal 2012 period, we submitted bids on 38 new projects for work to be performed at our Clifton, New Jersey facilities. We cannot be certain that we will be successful in winning any of the bids tendered. Even if we do receive orders, contracts are subject to cancellation by customers upon short notice with little or no penalty, as is typical in our industry.
We are committed to offering our customers comprehensive, integrated security system solutions that employ the latest technologies and address the most critical security requirements. The security industry continues to evolve rapidly as new technologies are developed specifically to meet security challenges and existing technologies are being adapted for new uses. In addition, the public and private sectors continue to analyze and distinguish new security risks and industry participants seek to develop technologies and products to fill these newly discerned requirements. We remain committed to pursuing teaming and OEM agreements that may add to our revenues and enhance both our product line and, ultimately, our ability to compete in our industry.
In September 2011, $94,000 of loans due to officers was converted into common stock. In February 2012, $15,000 of accrued compensation due to an officer was converted into common stock. The amounts due to officers and directors from interest-bearing advances increased in the Fiscal 2012 Period by $104,351 and the accrued compensation and other costs due to officers increased by $225,034. The increases in the amounts due to officers and the conversion of a portion into common stock resulted in additional funds provided to the Company totaling about $438,385.
In Fiscal 2008, the Company financed the purchase of equipment from a vendor in the amount of $101,762, evidenced by a bearing interest at the rate of 8% per annum. As the Company purchases product from the vendor a portion of each invoice will be charged to reduce the note balance. Management expects that the note will be repaid within the next 12 months. The balances at June 30, 2012 and 2011 were $2,639 and $14,237, respectively.
Investing activities for Fiscal 2012 were reduced to $24,800 from $357,515 in Fiscal 2011 in order to conserve cash. We do not have any material commitments for capital expenditures going forward.
Accounts payable and accrued expenses have increased by $647,272 in the Fiscal 2012 Period. This increase is accounts payable and accrued expenses is directly related to the timing of payments due to the delays in collecting the receivable from Lockheed Martin.
At June 30, 2012, we had a line of credit with a bank in the amount of $475,000 which we had fully utilized. Due to the net loss in fiscal 2012, we did not meet a covenant of the loan agreement which requires that we have a Minimum Debt Service Coverage Ratio, as defined in the agreement, of 1.1. The bank has provided a waiver of an event of default related to this loan covenant.
Day's sales outstanding (DSO) were approximately 144 days at June 30, 2012 as compared with 97 DSO at June 30, 2011. This increase is due to amounts not yet collected on the receivable from Lockheed Martin, which is subject to legal proceedings described further below.
Inventory increased by $16,991 in Fiscal 2012. However, we anticipate a decrease during the first half of Fiscal 2013 for shipments on committed projects that have been or are being released.
At June 30, 2012, we had working capital of about $501,000 compared to $1.8 million at June 30, 2011. Net cash used by operating activities for Fiscal 2012 was $520,125 as compared to net cash provided by operating activities of $33,480 for Fiscal 2011.
Net Profit/Loss .
Net loss before dividends for the Fiscal 2012 period was $(1,531,773) as compared to a net profit of $530,130 in Fiscal 2011.
Income Tax Benefit .
We recognized a net $130,000 deferred income tax benefit in fiscal 2012 and a $128,000 deferred tax benefit Fiscal 2011. The deferred income tax benefits were recorded based on expectations of that we will utilize a portion of our existing net operating loss carryforwards with future operating earnings. The company and its subsidiaries have net operating loss carryforwards for federal income tax purposes of about $5.7 million expiring in 2023 – 2032 and about $4.3 million for state income tax purposes expiring in 2013 – 2032.
Interest Expense.
Interest expense in the Fiscal 2012 Period was $72,998 as compared to $1,078 for the Fiscal 2011 Period. Included in interest expense for fiscal 2012 is the interest on the line of credit.
Stock Based Compensation.
In the Fiscal 2012 Period, we granted stock options to directors and employees that were valued at $96,815 and granted restricted stock to employees valued at $24,850. In the 2011 Period, we did not issue stock options to our directors or employees. The value of options is amortized over the vesting period of the underlying award. Stock-based compensation is non-cash and, therefore, has no impact on cash flow or liquidity .
Selling, General and Administrative (SG&A).
Selling, general and administrative expenses increased in the Fiscal 2012 Period to $1,525,988 from $1,413,240 in the Fiscal 2011 Period primarily because the Fiscal 2012 Period included an allowance for doubtful accounts in the amount of $200,000, partially offset by a decrease in other selling, general and administrative expenses of 6% .
Research and Development.
Research and development expenses were $139,322 in the Fiscal 2012 Period as compared to $129,722 in the Fiscal 2011 Period. Research and development expenses were maintained at previous levels for continued new product development during this period.
Gross Margins.
Gross margins for the Fiscal 2012 Period were 9% of revenue as compared to 50% of revenue for the Fiscal 2011 Period. The decrease in gross margins is primarily attributable to the reduction in the revenues in the Fiscal 2012 Period and to a change in the order mix of equipment sales and support services. We incurred an increase in material cost as a percentage of revenues due to the change in the mix of sales and support services. We experienced an increase in proposal, design and engineering support service costs as a percentage of revenues due primarily to the lower revenues in the Fiscal 2012 Period.
Revenues.
We had net revenues of $2,216,082 for the Fiscal 2012 Period, as compared to revenues of $3,958,941 for the Fiscal 2011 Period, representing a decrease of approximately 44%. Of the revenues reported in the Fiscal 2012 period, approximately 93% are attributable to domestic projects and 7% are attributable to international projects. The decrease in revenues in the Fiscal 2012 Period is attributable to the delays encountered by the Government related contract awards, Requests for Proposals (“RFP’s”) and task order awards. The Government has delayed the review and approval process which has had a further negative impact on sales for Fiscal 2012.
Recent Developments
Our revenues and results from operations for the year ended June 30, 2012 were negatively impacted by the ongoing delays by agencies of the U.S. Government in proceeding with approved projects, funding projects already awarded, and in awarding new contracts. We have invested significant time and personnel resources in fiscal 2012 in providing proposals on future projects, both as a prime contractor (Small Business) and as a subcontractor. We are awaiting the results of the bidding process. Our cash flow and liquidity was also severely impacted with the refusal by Lockheed Martin to pay us for the accounts receivable due from them totaling almost $1 million. These amounts are the subject of litigation, as described in Item 3 of this Annual Report on Form 10-K.
EU Receives Nobel Prize! (posthumously)
It's got a collapsing currency and rioting on the streets but the European Union wins the Nobel PEACE Prize
http://www.dailymail.co.uk/news/article-2216664/European-Union-awarded-Nobel-Peace-Prize.html#ixzz29N0X63qQ
No-kia upgraded to Yes-kia
The Fiscal Cliff Is Real: Here's What You Need To Do
"Nokia (NOK) has disappointed investors for the last two years. As you can see its red line has been declining compared to the other companies, the DOW, and NASDAQ. However, it has one last shot at redemption with its soon to be released Lumia 920 Windows Phone 8. Everything depends on how this phone is accepted by consumers. Because of the fact that it will interact with other Windows 8 devices, it should be popular with the "Office Crowd". And Microsoft seems determined to keep Nokia afloat. This one is definitely a long shot, but the upside could be substantial."
http://seekingalpha.com/article/923021-the-fiscal-cliff-is-real-here-s-what-you-need-to-do
Decision Time:
Slowly we turn, inch by inch, step by step....
Draghisms: 101 - Where Utopian Fantasy Hits The Road
ECB's Draghi: Euro Zone States Must Oversee One Another's Budgets
http://www.nasdaq.com/article/ecbs-draghi-euro-zone-states-must-oversee-one-anothers-budgets-20121013-00020#.UHqlosUzqn0
Post special dividend opinion from S&P Capital IQ
S&P MAINTAINS BUY OPINION ON SHARES OF SYCAMORE NETWORKS
(S&P Capital IQ)
We are reducing our 12-month target price by $13.50 to $7.50, based on 1.4X book value and the payout of roughly $289M in a one-time cash dividend. We are narrowing our FY 13 (Jul.) loss per share estimate by $0.15 to $0.30. SCMR reported a Jul-Q loss per share of $0.03, vs. a loss of $0.09, $0.11 better than our estimate. Despite our concerns with a cautious service provider spending environment, we believe SCMR's IQStream optimization products will help drive growth. Given the low share price, we believe a recurring dividend would benefit shareholders.
What about the person who PURCHASED your shares on 9/27/12? Did the purchaser on the other side of your sell get the special dividend as well? Are you sure your broker didn't adjust the price of your 9/27/12 sell downward on Friday to reflect the special dividend? If not, then you may have found a "special" loophole. Note the following excerpt about this issue from The Motley Fool.
Some people believe that investing in a stock just before the company pays a dividend is a neat trick. This especially is prevalent for those companies that are paying a large one-time dividend, such as that TDAmeritrade one, above. They'll buy the stock, get the dividend, and then sell the stock for close to what they paid and make a nice little profit from the dividend amount. Well, no such luck. Due to the adjustment, their net profit turns out to be real close to zero. As Snidely Whiplash would mutter, "Curses! Foiled again!"
http://wiki.fool.com/Ex-dividend
This is a special dividend which exceeded 25% of the share price. Different rules apply in such situations, but I agree it seems unnecessarily confusing
THE EURO IS FOREVER! (until it collapses)
Europe’s Bazooka Will Fire Blanks… Good Luck Killing the Crisis With That
http://www.zerohedge.com/contributed/2012-13-28/europe%E2%80%99s-bazooka-will-fire-blanks%E2%80%A6-good-luck-killing-crisis
Dateline Greece: Our fiscal rat hole needs more Euros......NOW!
Merkel to visit Greece as money running out
http://uk.reuters.com/article/2012/10/05/uk-eurozone-idUKBRE8940P620121005
Patience, grasshopper. Patience.
Warnings That A Massive Stock Market Crash Is Imminent
http://theeconomiccollapseblog.com/archives/warnings-that-a-massive-stock-market-crash-is-imminent
Meanwhile in Greece....
Greek Hopes Fade for Quick Deal on Austerity, Debt
http://www.cnbc.com/id/49282940
Important Consumer Notice:
Our Current Central Bank Model does not offer brakes as an option.
The Scourge Of Central Banking
http://seekingalpha.com/article/903891-the-scourge-of-central-banking
ECB LIVE! (TWITS FROM THE ECB - PUN INTENDED)
http://www.ecb.int/press/tvservices/webcast/html/webcast_121004.en.html