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Towerstream Corporation Message Board

  • tchen389 tchen389 Nov 13, 2012 9:53 AM Flag

    Clear Buyout Target

    I've done my research on this firm and IMO its clearly going to be bought out sometime in 2013. We've been hearing about "major partnerships" with still unnamed carriers. Granted that management hasn't lied about this, it's much more likely that these alleged carriers would rather buy TWER rather than sign up for any long term partnership. It's obvious from TWER's past few earnings reports that their business model wont be profitable until a vast network is established and economies of scale can be utilized. Hence, the revenue/profit potential of TWER requires it to either issue another large dilution effort to establish a much larger network or simply sell itself and allow a larger carrier firm to gain from its synergies. At a paltry market cap of about 150 million, even if an acquirer has to a substainal premium, say double, thats only 300 million. Look at the balance sheets of any of the three largest US carriers. They could all buy TWER for 300 mm without even putting a dent in their balance sheets. Obviously, they would like to buy TWER at when its at $2.50 for between $3.75 and $5 rather than when it was at it's peak of $5 for between $6.50 and $7.50. TWER will continue to bleed money until 2014, but we're approaching a price/market capitalization point where it's quite reasonable for someone to buy TWER before a competitor does.

    Sentiment: Buy

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    • I agree. I also got in today (at a lower price than you, $2.60). I've also done my homework here and the smart move is to buy and wait for a buyout or partnership to be announced. Though I agree that a buyout is more likely due to TWER's low market cap. Management has also told investors that they have agreements with "two major carriers" and that revenue will soon rolling in. In fact, despite yet again failing to announce the names of these carriers (once again) in their last conference call (3 days ago), I found it suspicious that their tone was so jovial. IMO, there's very little down side at these price levels. What really made me jump the gun on this one is that in the last conference call, when asked about whether or not another dilution was needed to shore up more cash, management specifically said that they were "well positioned" for the remainder of the year and Q1 2013. With only $23 million left in cash and a burn rate of $8-9 million each quarter, that's looking pretty suspicious. Either they expect a huge increase in revenue cash flow beginning next quarter going forward or they expect to announce a partnership/buyout that will make raising cash and diluting us (and their own shares) unnecessary.

      Sentiment: Buy

    • If anyone cares, I bought into TWER today at $2.65 (close to the low #lucky) for a $25,100 position for my portfolio.

      Sentiment: Buy

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