Barron's mention
SEPTEMBER 23, 2002
Rich and Reviled Tech stocks with fat wallets but thin stock prices get no respect, but maybe some should.
By ANDREW BARY
Call them the living dead or cash-rich bargain stocks. They are technology companies whose share prices have been savaged in the brutal bear market of the past 30 months and now trade at or below the value of the cash on their balance sheets.
These former investor favorites include Commerce One, Corvis, Sycamore Networks, and Tibco Software. Some value-oriented investors are attracted to them because their businesses essentially can be purchased free or at a negative implied price.
Investors in these stocks could win if business conditions improve or if the companies make cash distributions or are taken over. Some of the stocks have slid so low that their issuers have done reverse splits to boost their prices. Many are orphans, with little or no coverage from Wall Street analysts and scant interest from institutions because of their low market values and share prices below $5. Institutions often avoid such stocks because of their penny-stock taint and perceived bankruptcy risk, although most cash-rich outfits aren't in imminent danger of going belly up.
Milunovich says Corvis and the larger Ciena, both makers of optical-networking products for telecoms, could be takeover candidates, too.
Corvis, which once fetched 115 a share, trades for just 62 cents a share, less than half its net cash position. Corvis's sales have collapsed, to just $3 million in the latest quarter, but its fans like its balance sheet and technology. |
