Shares of Vecima Networks (TSX:VCM) are racing today after the company announced it will hire investment bankers Stifel Nicolaus & Company.
The wording of this morning’s press release has become all too familiar to Canadian tech investors who have watched leaders such as Miranda, Gennum, Zarlink, 20-20, and Mosaid sold off of late. “Stifel will assist the Vecima board of directors in exploring and evaluating a range of strategic alternatives to maximize value for the company’s shareholders.” it read.
The company says it will consider partnerships, alternative strategic business models, a sale of assets or other transactions. Management says it is doing this because it believes its current share price doesn’t accurately reflect its present or potential value.
CEO Surinder Kumar said “During this process, we will remain focused on managing our growth in revenue and profitability, which is driven by our investment in research and development, and introduction of new products.”
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Last year, for the first time in its history, the Victoria based broadband equipment supplier was forced, for the first time in its history, to lay off a significant portion of its staff. Vecima management said the company is in a transition phase, in which revenue from its legacy products was tailing off and revenue from new products wasn’t kicking in fast enough to replace it. The company’s most recent quarter, however, saw this trend come to an end, as Q3 2012 revenue increased 22% to $25.8-million, mainly on the back of strong converged wired solutions sales.
At press time, shares of Vecima Networks were up 27.1% to $4.59.