Concord Camera Corp.
(NDAQ: LENS) has more to worry about than a cold market as activist
shareholders are now (in so many words) calling for an outright sale.
The camera-maker has experienced steep declines in sales and margins
that have resulted in over fifteen consecutive quarters of losses. This
prompted the company to pursue its own evaluation of strategic
alternatives as many are speculating that a financial buyer may be
willing to step in and acquire the company at a premium. So, does this
make LENS a buying opportunity before such an announcement?
Concord is engaged in designing, developing, manufacturing and
selling single-use and 35-millimeter traditional film cameras. The firm
manufactures the cameras in China and hands them over to retail
distribution partners who put them on store shelves around the world.
This is a market that still exists thanks to tourism, but faces steep
declines in sales as digital cameras continue to replace traditional
film cameras. Worse, the company is operating on razor thin margins due
to its middle-man nature that makes it hard to compete effectively on
price with a growing number of manufacturers that are doubling as
distributors.
Everest Special Situation Fund recently purchased a five percent
stake in the company and communicated their belief that Concord shares
are extremely undervalued despite poor operating performance. The
activist fund believes that the company is in an excellent position to
initiate “substantial changes” to its business. To this end, the board
of directors announced that their special committee established to
explore strategic alternatives was close to making a decision. However
many investors, including Everest, are worried that the result may be
that the company is best off taking the lonely road rather than pushing
for a sale.
Everest demanded (in so many words) a sale in its February 20th
letter to the board. The fund noted that it has collaborated with a
number of companies in situations similar to Concord’s in the past,
acting as a liaison between investors and acquiring companies. Everest
urged the board to utilize their expertise and pursue strategic
alternatives or else they would seek representation on the board to
protect their rights as stockholders and unlock value. Clearly, many
people are looking for Concord to put itself up for sale at this point
in order to reverse its sixteen straight quarters of losses and
maximize value for stockholders. Indeed, privatizing the company alone
would substantially reduce expenses for a company with a market cap of
just $25 million!
In the end, Concord is a company that may be of interest to a
financial buyer as its shares are extremely undervalued. In fact,
privatization alone would likely save the company enough money in
public company costs to justify a takeover. Many shareholders are in
support of such a decision, but fear that the company may put up a
fight before pursuing alternatives. Combined, these factors make LENS a
stock worth watching closely over the next few months!
Related Companies
Eastman Kodak Company (EK)
FUJIFILM Holdings Corp. (FUJI)
Ballantyne of Omaha, Inc. (BTN)
Nature Vision, Inc. (NRVN)
Voyager Petroleum, Inc. (VYGO)
Luckyfilm Co., Ltd. (600135)
SpatiaLight, Inc. (SPLT)
Pliant Corporation
Camera Platforms International, Inc. (CPFR)
Sequel Technology Corp. (SEQL)