Extreme Networks -> Buyout Target?
April 27th, 2010
Full Disclosure: I took a position in EXTR at $2.91 in December, 2009.
At the time I took my initial position in Extreme Networks, I was looking at this company as a buyout target. Hewlett Packard had recently acquired 3Com and after a dismal Q1, Bob Corey had been named interim CEO. Bob Corey has been associated with several companies that went on to be aquired and had recently taken a modest position in the company.
The woes that had plagued the company were partly the result of problems with their suppliers and as such, appeared to be an obstacle that was fairly easy to rectify . The bigger challenge for EXTR was to turn the corner on profitability through growth and not just cost-cutting. It appears that CEO Corey and EXTR are moving in the right direction.
Today EXTR reported meeting their revenue projections and beat the Q4 EPS projection by $.02 on a non-GAAP basis (.06 vs. .04). More importantly, guidance for the coming quarter is for top line revenue to increase nearly 7% sequentially and about 3% Qtr. over Qtr.
While this hardly represents gang-buster growth, it justifies the recent run-up in the stock price; providing some cover while waiting for a speculative buyout. I feel EXTR is fairly priced around $3.75 price per share.
Entry Filed under: Finance
2 Comments Add your own
1. Google Dabylbfocketfaminoj | March 25th, 2011 at 1:42 PM
Good day! This post could not be written any better! Reading through this post reminds me of my old room mate! He always kept talking about this. I will forward this post to him. Fairly certain he will have a good read. Thanks for sharing!
2. Administrator | July 21st, 2011 at 7:02 AM
I apologize for not recognizing your post sooner. As you can see I don’t blog often and I didn’t even realize I had configured things so that I needed to approve people’s comments. I just figured no one was out there reading! Anyway – I’ll be checking for comments more frequently from now on.
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