Renewing line of credit, and approving an option to buy back $1 mil worth of common shares. That's only 120,000 shares at today's price, but still, a nice little sign of confidence that could provide a boost to trading activity. Be curious to hear the thoughts of others....
Why would a company with so few shares outstanding buy back stock? Even if a hedge fund or large investor wanted a position in this stock there are not enough shares available as it is. Maybe we will go private. I'd rather a 2:1 split and double the shares outstanding, get more float out to the public. JMTC
How the 8K release will read in tomorrow's Wisc State Journal:
• JUDY NEWMAN | Wisconsin State Journal
Sonic Foundry will buy back up to $1 million worth of stock, the company said Monday.
The board of the Madison webcasting and video archiving company has authorized the repurchase on the open market or through privately negotiated transactions.
“The board and the management team are altogether convinced that our stock is significantly undervalued,” said Gary Weis, chief executive officer.
Weis said the board decided that a buyback would be “good use of our capital” and would demonstrate “that we have great confidence in the future of the stock.”
The announcement came after the close of trading Monday.
Sonic Foundry shares ended the day at $8.39 a share, up 13 cents. In the past 52 weeks, the stock has sold between $5.67 to $9.00 a share.
A stock buyback is generally a “sign of increased confidence that the board wants to send to existing investors,” said John Nelson, a portfolio manager with the State of Wisconsin Investment Board.
“If they are expecting an increase in profitability, it’s a good time to do it,” he said.
Nelson said the key, for investors, will be in the followup. “What you really like to see is that they execute on (the buybacks),” he said.
Sonic Foundry also announced a renewal of its line of $3 million credit with Silicon Valley Bank in Chicago. The agreement continues a maximum availability of $3 million, reduces the interest rate, and extends the credit line to Oct. 1, 2015.
Weis said the credit line is typically not used much but provides additional capital on the balance sheet and offers “the flexibility of additional capital on a short-term basis.”