Tag - Cbs

After a recent high-profile buyout announcement in the same sector, it may be time to kick the tires of long-time underperformer, but cash rich small cap SourceForge, Inc. (Nasdaq:LNUX).

In mid-May, online tech news and information provider CNET Networks Inc. (Nasdaq:CNET) agreed to be acquired by CBS Corp. (NYSE:CBS) for $1.8 billion. The price paid for CNET represented a hefty 45% premium over its stock price the day before the deal was announced. The CBS take-out of CNET followed months of pressure by a group of CNET shareholders to sell the large, but struggling, company. The CNET announcement could place pressure on the remaining, small publicly held Internet media companies to find merger partners.

One such name is $92 million SourceForge. Formerly known as VA Software Corporation, SourceForge changed to its new corporate name last year after the sale of its software business to CollabNet. The Mountain View, Calif.-based company’s remaining operations include its namesake SourceForge.net website, which hosts more than 170,000 open source software projects. SourceForge also runs IT community and news-focused websites Slashdot.org, Linux.com, FreshMeat.net, ITManagersJournal.com and NewsForge.com. SourceForge also operates a niche e-commerce operation called ThinkGeek.com. All told, SourceForge claims that its network of websites reaches 32 million unique visitors each month. 
 
While SourceForge has a strong position in a valuable segment of the online media space, serving technology professionals and enthusiasts, it has been unable to translate this position into sustained profits. SourceForge management has attracted a reputation in recent years for unfulfilled promises and missed guidance. After SourceForge reported another quarter of disappointing results at the end of May, Trivium Capital, the company’s second-largest shareholder, called on SourceForge to either seek strategic alternatives or announce a significant stock buyback. Trivium pointed out that SourceForge, as of the most recent quarter, was sitting on a cash position of $0.82 a share with “possibly” another $0.10 a share in value from its stake in CollabNet. On Monday, SourceForge established a new 52-week low . . .

Small caps gained shallow ground midday on the heels of Fed Chairman Bernanke’s sanguine comments surrounding the aftermath of the credit crisis and banks’ recent abilities to raise capital in response.

At 1:08 p.m. ET, the Russell 2000 (NYSE:IWM) edged up 3.89, or 0.53%, to 739.96 while the Dow gained 51.37, or 0.4%, to 12,949.75.

In a prepared statement to a Chicago Fed conference, Bernanke offered encouraging remarks this morning when he addressed lessons learned from the credit debacle. The Fed Chair said conditions remain delicate and encouraged banks to continue being “proactive” in raising needed capital to create new profit opportunities as the economy and financial markets improve.

“Importantly, capital raising and balance sheet repair allow for the extension of new credit, which supports economic expansion,” Bernanke said.

He also noted that banks that closely monitored valuation inaccuracies of financial instruments fared better.

In economic news, investors shrugged off a slew of downbeat data. The Philadelphia Fed survey clocked in at negative 15.6, which was better than the projection for a decline of 19. That report followed disappointing numbers from the release of Industrial Production and the New York Manufacturing Survey, both of which pointed to a bleak manufacturing activity. Industrial Production was pegged at minus 0.7%, which was below the forecast for a dip of 0.3%. Meanwhile, the NY Manufacturing data came in at minus 3.23 for May, below the forecast for 0.00.

In addition, the Weekly Claims report edged slightly higher to 371,000, which was just above the forecast of 370,000.