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Technology Stocks : CoSine Communications(COSN):
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To: metoo105 who wrote (117)4/30/2008 11:53:20 PM
From: Glenn Petersen  Read Replies (1) of 124
 
You appear to be on the same wave length as Eric Appell:

CoSineTrading at Cash; $20/Share of NOLs

by: Eric Appell

posted on: April 29, 2008

I suggest investors think of CoSine Communications (COSN.PK) as a Special Purpose Acquisition Vehicle [SPAC] that is trading at cash. I have followed Cosine for years. They used to sell network equipment to the telecoms and once sported a market cap of $5B.

Today, the market cap is $25M (yes, million), which is close to its cash position of $23M. The company has only 1 employee--a CEO--and is profitable because interest income is greater than operating expenses.

Here's the reason to own the stock: The well-known activist fund, Steel Partners, together with an affiliate, own just under 50% of the shares. Their average price is roughly $2.25. Steel Partners and COSN are looking to acquire a profitable company in order to take advantage of COSN's $207M of Net Operating Loss [NOL] carry-forwards. That's $20/share in NOLs. After talking with the CEO, it's my belief that COSN will probably buy a profitable division within a much larger company. After all, Steel Partners does a lot of deals, and at some point they should be able to find the perfect company to slide into this shell. Given the valuations of SPACs pre- and post-acquisitions, I think COSN's ultimate valuation could be 2x-4x today's.

Disclosure: Author holds a long position in COSN.PK

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