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Zhone Technologies Inc. Message Board

a_clear_indication 17 posts  |  Last Activity: Aug 10, 2014 11:05 PM Member since: May 19, 2001
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  • Reply to

    Mory's Sale of 17K Shares...

    by alakamuna Nov 1, 2013 8:20 PM
    a_clear_indication a_clear_indication Aug 10, 2014 11:05 PM Flag


  • a_clear_indication a_clear_indication Jul 25, 2014 1:28 PM Flag

    If you just create a new company with financing to do enough R&D, the old company could return a huge % dividend if you weren't putting 15 million of what would otherwise be earnings into RD each year.

  • a_clear_indication a_clear_indication Jul 24, 2014 5:24 PM Flag

    I see your idea.
    It sounds like you're suggesting split the business in two, generating a share of new company(ZhonePOL) which has future growth but can absorb new cash for future looking investment but has a contract for purchase of old company stuff. So old company(ZhoneManufacturing) becomes a cash cow and services the new company generating strong dividends and not investing much in research. As the years go by the old company sells the basic technology to the new company getting profits that can also be offset by the nols. At the end of the day the old company becomes an empty shell selling only obsolete product till the nols fade away.

  • a_clear_indication a_clear_indication Jul 24, 2014 3:54 PM Flag

    The road to liquidity is not a straight line. Nobody wants to pay extra taxes if they have a choice.
    I don't know the technical details of avoiding 382 limitations but it does suggest that you have to use the
    probable performance of zhone the standalone company utilizing its nols as a reference point before you go into
    any MA deal. Zhone doesn't need a one trick ceo to sell the company, they need to keep building an organization to take advantage of the technology they can build and sell at a profit.

  • a_clear_indication a_clear_indication Jul 24, 2014 2:06 PM Flag

    If the 382 were triggered you would be offsetting(for example with a sale price of 100M )
    but only 5 mill per year(of income, that equivalent to the theoretical earnings of a long bond), at a tax rate of 35% that would be about 1.6 million benefit per year.
    Without triggering the 382 the nols could be much larger perhaps as much as 165 million over the next 10 to 20 years...

  • a_clear_indication a_clear_indication Jul 24, 2014 1:01 PM Flag

    One subtlety is that all non 5% shareholders are treated as one shareholder.
    But since they currently hold 85% of the equity they can't trigger a 50% increase.
    If a new party bought more than 5% of the stock, would that kill the nols??

  • It seems that you will trigger the section 382 limitation if you increase the 5% ownership(s) by 50% or more.
    The question is will a decrease the 5% ownership stakes cause the 382 limitation to being triggered?

    Can anyone flesh out whether a decrease in the holding of the 5% owners(and how much decrease) owner causes a problem with the 382 limitation? Is mory a 5% owner ( do options count?)

  • Reply to

    What is potential Takeover Price of ZHNE

    by telecom_buildout Jul 23, 2014 1:04 PM
    a_clear_indication a_clear_indication Jul 24, 2014 2:33 AM Flag

    One thing to consider in valuing the nols is that there is a 20 year limitation on the carry forward. In zhones case NOLS were generated from about 1999 to 2012.
    It also looks like you also have to avoid triggering a 382 limitation which could be triggered by a change in holdings of any 5% owner. If the 382 election is triggered amount of nols you can use per year becomes limited to the cash value of the company times the long term tax exempt rate (about 5%) per year. (If 382 were triggered and zhone sold for 200 million, you could only shelter about 10 million in earnings per year).
    Really I have to conclude that an ordinary purchase would probably trigger the 382 election, and it looks like Zhone will best utilize the nols as stand alone company.

  • Reply to

    What is potential Takeover Price of ZHNE

    by telecom_buildout Jul 23, 2014 1:04 PM
    a_clear_indication a_clear_indication Jul 23, 2014 2:37 PM Flag

    the takeover process depends of getting a value for the nols. Along the way zhone did acquire a billion dollars worth of net operating losses. So a company that had a plan to keep the nols intact (mory and nea willing) could offer the best price. Essentially zhone has a free pass on taxes for the first billion in earnings. That in the right hands could be worth 250million alone. Given the marketcap of zhone is sitting at 111 million. I think its fair to expect a good deal would be a double from here.
    I don't know the kind of deal you have to structure to get advantage of nols. But it could be a competitor with a weaker or similar product, that buys zhone, kills thier own product and pours R&D money into a wholly owned zhone and gets advantage of the the nols down the road.. But I'm not a coorporate tax lawyer.

  • VANCOUVER, BC, July 22, 2014 /24-7PressRelease/ -- The new fibre-optic ELITE certification of AGC, addresses the growing green-technology demand in Canada for the design, build and expansion of POL networks. With a mandate to grow industry awareness within the natural resource, education, tourism, hospitality, healthcare, retail, business, government and entertainment sectors in Western Canada, while showcasing the company's tactical expertise, AGC has aligned with Zhone Technologies and its FiberLAN brand.

    story from digitaljournal came up in search

  • Reply to

    Why Monday’s closing price is important?

    by alakamuna Jul 20, 2014 10:31 AM
    a_clear_indication a_clear_indication Jul 21, 2014 5:07 PM Flag

    Alak, I tend to agree with your basic sentiments.
    Most of my cash shares are now in long term gains and I'm happy to hold those for whoever long it takes.
    My expectations would be that if there is a deal that takes longer the better the price. I would think the sweet spot would be when fiberlan sales start to become about 20 % or more of the earnings mix, which should be at the end of 2015?
    I would guess at a minimum price target at 6.00 Share or market cap of 200 million if the deal is early, but i would guess that would happen late in 2015 at earliest. If the deal happens after 2016 I could hope for more like 9$ share or 300 million.


  • Reply to

    Why Monday’s closing price is important?

    by alakamuna Jul 20, 2014 10:31 AM
    a_clear_indication a_clear_indication Jul 21, 2014 4:32 PM Flag

    Strong buying a the close.. Good to see the shift from drifting to strength. Perhaps some of the larger holders of zhone bought at end of day, to make sure Norrod doesn't get too sweet of a deal.

  • Reply to

    Why Monday’s closing price is important?

    by alakamuna Jul 20, 2014 10:31 AM
    a_clear_indication a_clear_indication Jul 20, 2014 3:44 PM Flag

    I expect the price at close tomorrow has a lot to do with market's reconsideration of Norrod and what a reasonable expectation for near term liquidity events amounts to.
    Norrod seems pretty focused on driving down that road to liquidity. All things considered I expect his entrance and Mory's retreat should walk the stock back int the 4.50$ range by the end of the quarter.
    As always I expect Zhone will eventually get to a price/sales comparable to adtran or calix. Given that zhone is profitable it should get to a ps of 1.5. which would be a double from current price.
    The game now is figuring out whether a Corning or an IBM is in any hurry to get a lock on the gpon market.

  • Reply to

    Great day for Mory

    by please_buy_while_i_sell Jul 18, 2014 11:41 AM
    a_clear_indication a_clear_indication Jul 18, 2014 3:58 PM Flag

    for whatever mory's good or bad qualties are. The transition to new blood at operational level, will
    _____RESET_____ the market perception of the stock. So far good for the longs.

  • Reply to

    Zhones done

    by ineeda77 Jul 17, 2014 4:36 PM
    a_clear_indication a_clear_indication Jul 18, 2014 3:41 PM Flag

    yeah maybe about 200M, but no sooner than 2nd half of 2015.

  • a_clear_indication by a_clear_indication Jul 10, 2014 12:39 PM Flag

    article about the fiber companies.
    If you're hooking up a lot of fiber for the last mile, that has got to be OK for
    zhone, calix adtran, anybody that makes ont/olt

    search this sentence:
    Companies like Level 3 have been successful in shifting their focus to the industry's sweet spot - the "last mile" of fiber which is typically the most expensive to develop.

  • Reply to

    today's breakout...

    by anilkoomar Jun 12, 2014 10:36 AM
    a_clear_indication a_clear_indication Jun 14, 2014 7:36 PM Flag

    sitting at 43,236,xxx The meter readers got burned at the last call when the big jump incapacity fell into
    q2 instead of q1. Zhone has had some fast upward motions in the past it could be a real stealth play
    if big vars start sticking them into military and government installations without any formal announcement. You know they ain't gonna install hauwei branded olt/ont in the pentagon.

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