Shadow can you please share with us your thoughts on tender offer and RS
Like you, I owned this stock for years and see no reason to bail now. I think the company & management are putting the money to walk the talk. They bought 20mil on buy back and 25 mil on tender offer out of 145 mil total. I like that part what I don;t like is the reverse split. Why are they doing it now = Is it desperation and games to hide their incompetence or there is real value in doing that?
Just only one advise from someone who has made money in UTSI never shorting it. Overwhelming majority of tech small caps are "trading stocks".If you think UTSI is different animal then you are arguing with the market.You can't afford to do this for too long.
I place large sums of money in just one stock.This simple formula saved my #$%$ many times.
One can only guess what the outcome of the tender offer will be but here are some thoughts. First thought is who is selling now and why? The answer most likely is tax selling to generate a loss to cover gains on other stocks during the past year. Stockholders would otherwise put their stock up for the tender offer and then sell what wasn't taken afterwards. With 25 million shares removed from the market, selling pressure will be significantly reduced so even if the price does decline below $1.20 a seller will still likely get the $1.00 or so that they can get now.The only major stock holder still selling is likely to be Artemus and they have less than 3.9 million shares or so left by now.
Company stopped buying back stock when it announced the tender offer so there is still 143 million shares outstanding. At least 43 million of these shares will not be tendered as they belong to Hong Lu, Masa Son, the Chinese government Beijing entity, and Shah capital. So the most that can be offered is 100 million shares which means the pro rata take share will be at least 25% and not 16%.
I am only tendering those shares I bought recently as they are all profitable so I will still have a large position. I am estimating the take rate will be around 50% but that is a pure guess. Stockholders with positions in UTSI can buy stock now and tender it with a good chance of getting at least a 20% profit after just a few weeks. Risk is stock will go up after the tender and the company may take 100% of what you tender so there is a lot of guess work involved here. If the stock price goes down, you will still have sold some stock at a profit and the remainder will be at a price no worse that what it has been the past few months. Book value of remaining stock will go up quite a bit enhnaced by the removal of liability that counterbalanced the cash used for the spinoff of the IPTV division and the tender offer that is buying back stock at a large discount to cash/book value per share.
Reverse split is a very wise move at this point. Many institutions are not allowed to buy a stock with a price in the $1 range. So a reverse split might increase the pool of potential buyers for UTSI's stock. At a higher price, the company stock is also more likely to get into some of the small cap indices and then be bought by index funds.
Masa Son's Softbank just took control of Sprint/Clearwire in a huge deal. He has used UTSI's MPLS-TP product in Japan, and other UTSI products. Will he use them in the US also? Will he use UTSI's cloud products? Will the telecom and/or cable companies in China use UTSI's cloud products? Unfortunately, the company has not put much information out about its residual products and capabilities after the IPTV spinoff and that makes any decision about the tender offer difficult for most. My view remains that the insiders still have a huge investment in this company and I will stay with them selling own a small portion of my holdings in the tender offer. Masa Son and Hong Lu are both quite successful and wealthy and do not have to remain involved in UTSI at all. The fact that they do tells me they will do whatever it takes to make this company successful. I will continue going along for the ride and hope that I am right.
"Reverse split is a very wise move at this point. Many institutions are not allowed to buy a stock with a price in the $1 range. So a reverse split might increase the pool of potential buyers for
UTSI's stock. At a higher price, the company stock is also more likely to get into some of the small cap indices and then be bought by index funds". There it is, the usual hype insiders put out to support a reverse split (nearly all of which fail). About the "$1" comment, should have said many institutions are not allowed to buy a stock with a price under $5, which is what the SEC terms a "penny stock". A 3 to 1 split gets nowhere close to that mark. True, some index funds could pick up a tiny share. but this is rarely a major factor. Serious investors at this point want to see if the company makes money the old fashioned way, by hard work,
innovations, and competitiveness. There is no hard evidence of this as far as I can see, during all the years since PAS, which was in any event low tech. Oh, Shadow forgot to add that
since insiders share our fate as shareholders, they would not risk losing their investment with a
failed R/S. That too is part of the usual spin. However, if the price increase just creates more
room for shorts to move in and bring the price right back down again, and we have only a third
of our original shares (wash, rinse, repeat) it is called getting washed out. Insiders are not really that concerned, because they can award themselves all new subscription rights and make it up. What do you think the chances are that retail investors will get those subscription rights?
Will say it again, R/S only really works on a business with strong underlying fundamentals for growth (like AIG for example). The track record here speaks for itself. Just my humble opinion.