What's the real value of VHC?
Deep Value, Special Situations
Seeking Alpha Analyst Since 2010
For the past 30 years, I have been involved in startups, as a founder, and active investor. My first company was purchased by Johnson & Johnson, which set the foundation for future investments. By focusing on startups I learned the advantage of investing in promising companies before they became household names. My interest in startups has never waned, and has become my primary focus today.
If a buyout is in order, what is a fair price?. Here's what we know.
One: the current patent infringement lawsuits are estimated at $1 billion.
Two: the estimated annual licensing revenue for VHC is $1 billion annually.
Three: the price tag that I am hearing on the street for a buyout is $50 per share.
Four: Siemens, Apple, and Cisco are sitting on about $75 billion in cash (about $25 billion each).
Many longtime shareholders believe, a $50 price tag is too low. That puts the value of the company at about $2.5 billion, or one half times potential annual licensing revenue.
On a side note, take a look at today's options, particularly May calls. Very aggressive buying! If this is the result of an information leak, it looks like there could be an announcement before May expiration.
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