Concurrent Update

Concurrent announced that they had a deal to sell their “Real Time” business for $35 million. This is about 50% of their business. It will give them close to $5 a share in cash (no debt). The price seems too low, barely over one times revenue for a profitable division. If they sell the rest of the company for the same multiple we are looking at about $8 a share. They also released Q3 earnings which included Real Time results. Their existing business revenues rose from $7.2 million to $7.5 million while the Real Time revenues fell from $8.3 million to $7.5 million. They lost $1.6 million compared to $1.2 million loss last year. The current quarter included $1.1 million of transaction costs, so their loss fell excluding these costs. They will have to cut some costs out of the remaining business to be profitable. My valuation fell to $10.60 from $13.83. They are still paying the $.48 dividend, so the “waiting for something to happen” cost is covered. They are also discussing what to do with all the money—close to $50 million. I hope they declare a $3 dividend and not do a share buyback—unless they buy back at $8 a share, which I don’t think will happen. They only have about 9.3 million shares outstanding.

 

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