Greenbackd

Network Engines Inc (NASDAQ:NENG) has announced that it is reinstating its stock repurchase program.

We’ve been following NENG (see post archive here) since January 13 when it was trading at $0.38, which gave it a market capitalization of just $16.5M. The stock is up 10.5% since our initial post to $0.42, giving it a market capitalization of $18.1M. We estimate the company’s liquidation valuation to be around 40% higher at $23.8M or $0.55 per share. In November 2007, an activist investor, Trinad Management, pushed the company to “immediately [implement] a share buy-back program.” The company demurred and saw its stock sink to all-time lows. The company has now reinstated that stock repurchase program, which presents the possibility of increasing the company’s per share liquidation value above our $0.55 per share estimate and is good news for stockholders.

The company’s press release is set out below:

NEI RE-INSTITUTES STOCK REPURCHASE PROGRAM

CANTON, MA – March 16, 2009 – NEI (Nasdaq: NENG), a leading provider of application platforms, appliances and services for storage, security and communications software developers, today announced that its Board of Directors has authorized the re-institution of the Company’s stock repurchase program. This program, initially launched on June 12, 2008, authorizes the repurchase of up to $5 million of NEI’s common stock from time to time on the open market or in non-solicited privately negotiated transactions. During 2008, the Company had repurchased approximately $1.1 million, or 1,256,801 shares.

The timing and amount of shares repurchased will be determined at management’s discretion, depending upon its evaluation of market conditions and other factors. The Company plans to use existing working capital and future cash generation to finance the repurchases. On December 31, 2008, NEI reported a cash balance of $13.2 million and had approximately 43.2 million shares of common stock outstanding with a book value of about $1.25 per share.

“The Board’s decision to re-initiate the repurchase program strongly validates its confidence in and the prospects for the Company’s future,” said Greg Shortell, President and Chief Executive Officer of NEI. “We believe that the repurchase of our common stock at this time is an effective use of our capital based on current market conditions and the price of our stock relative to the Company’s balance sheet and enterprise value.”

[Full Disclosure: We do not have a holding in NENG. This is neither a recommendation to buy or sell any securities. All information provided believed to be reliable and presented for information purposes only. Do your own research before investing in any security.]