The Long Case for Network Engines (NENG)

| About: Network Engines, (NENG)

I believe that Network Engines, Inc. (NENG), at its current price of $1.88, represents a low-risk investment, with substantial upside price potential in the next several years, should NENG’s newly appointed, and highly experienced Chief Executive Officer, execute on some key business initiatives and position the company successfully in the high-growth network server appliance industry.


The current stats on NENG are as follows:

  • Current Share Price: 1.88
  • Shares Out: 39 million fully diluted
  • Market Cap: 73 million
  • Net Cash: 32mm
  • Debt: $0
  • EV (Enterprise Value or Value of company minus cash + debt): $41 million

Network Engines (Nasdaq: NENG) generates revenue from two distinct business lines, both targeting the server appliance market.

By way of introduction, a server appliance is: “a specialized server that is designed for ease of installation and maintenance. Server appliances have their hardware and software bundled in the product, so all applications are pre-installed. The appliance is plugged into an existing network and can begin working almost immediately, with little configuration. It is designed to run with little or no support.