GBIX sitting on over $10 per share in cash. Considered to be a possible acquisition candidate per RedHerring.com:
redherring.com
HOST WITH THE MOST
Globix, a Web hosting firm, has the least amount of cash of the three companies featured in this column, $378.5
million. But that total is nearly twice the company's market value of $189 million. Think of it this way: you only have
to pay $5.06 a share for Globix even though it has $10.15 worth of cash a share.
Globix is wisely taking steps to conserve capital, having recently abandoned its idea of opening up a new data center
in Boston. Instead, the company will establish a network point of presence (POP), a less costly undertaking than
actually leasing a facility for a data center. In addition, Globix received $23 million in new vendor financing earlier this
month.
Web-hosting stocks have been pummeled over the past few months, in part because of concerns about increasing
competition from telecommunications companies. Telecoms are continuing to look for ways to bolster their product
offerings to corporate customers, and Web-hosting is a natural option. That's a big reason why Worldcom (Nasdaq:
WCOM) is buying Digex (Nasdaq: DIGX) and Japan's NTT acquired Verio last year.
I think this consolidation trend actually augurs well for Globix, as it too is being viewed as a possible takeover target.
As a matter of fact, Sprint (NYSE: FON) has said recently that it would consider buying a Web-hosting company.
Investing in a company because of takeover prospects is, of course, risky but it can be lucrative. But since Globix is
just one of a few remaining pure-play Web hosting companies out there, there is a certain scarcity factor. For
acquirers eyeing that stockpile of cash, that makes the stock all the more attractive. |
