BigBand Networks Inc (NasdaqGM:BBND) is interesting activist situation with ValueAct’s small cap fund holding 11% of its outstanding shares. I’d like to talk to someone who knows about BBND and its industry. You can reach me at greenbackd [at] gmail [dot] com.
BBND develops, markets and sells network-based platforms that multiple system operators (MSOs) and telecommunications companies to offer video services across coaxial, fiber and copper networks. The Company’s customers are using its platforms to expand high-definition television (HDTV) services and ensure video advertising programming to subscribers. The Company’s Broadcast Video, TelcoTV and Switched Digital Video solutions comprises a combination of its modular software and programmable hardware platforms. The Company sells its products and services to customers in the United States and Canada through its direct sales force. The Company sells to customers internationally through a combination of direct sales and resellers. Its international resellers include Guangdong Tongke, Sugys and Ssangyong, who sell to end users such as Jiangsu Cable and LG Powercom.
Value proposition in summary
BBND’s tangible book value at 31 March was $142M or $2.10 per share (~80% of BBND’s assets are cash and short term investments and it has no debt). It closed yesterday at $2.81, giving it a market capitalization of $190M. The top line has fallen off a cliff, down from $185M in 2008 to $127M in the twelve months Cash from operations has fallen even more precipitously, down from $48.8M in 2006 to $1.4M in the twelve months to 31 March. CapEx has run at $4.9M over the last twelve months and was $4.6M in 2009.
ValueAct is an exceptionally well-performed activist investor. As Davy Bui notes in this article:
ValueAct Capital [is] one of the elite activist funds, who as a group averaged gains of 144% in companies where they filed 13D forms.
According to the most recent 13D filed 18 May, as at 10 May ValueAct Capital held 11% of BBND’s outstanding capital in its SmallCap Master Fund. BBND released results on 7 May and the stock has fallen 20% since. ValueAct has continued to buy heavily, so clearly sees value at these prices.
There’s plenty of volume in this stock at these prices, so I’d love to talk to someone who understands BBND and the industry. Please get in touch at greenbackd [at] gmail [dot] com.