I do not belong to a group here, and the damage has been done by 15.2 Million shares issued in the private placement AND subsequent option related trades. Long or short, i trade between 500 and 2000 shares of Navarre. My first NAVR buy was 500 at 4 5/8, FYI.
end of message.
C.
The word from the motley fools (dated but not outdated, alse see the positive facts)
fnews.yahoo.com
HOW COULD YOU HAVE SEEN IT COMING?
Some companies Navarre learn. In May, the company was running low on funds so it issued a $20 million private placement. The fact that it was dilutive would be an understatement. The deal consisted of 7.6 million shares issued at $2 5/8 and 7.6 million warrants exercisable at $3 1/2.
The offering might have seemed fathomable earlier in the year when the stock was trading barely above two bucks a share. However, since the
shares had hit $12 3/4 the month before, Navarre's timing couldn't have been worse. The logical solution, which was to produce working capital by spinning off the pure Internet glitz of NetRadio, did not occur to the company until late July. Too little, too late. By then the damage was done and the dilution had flooded the stock.
The placement buyers, which included more than a dozen individual investors, pension funds, and even American Gramophone (a long-time supplier to Navarre), simply had one restriction before cashing in on their bounty -- they had to wait until the end of June to begin selling off their respective stakes.
So, just nine days into July, when news that Barnes & Noble's website would begin doing what the brick and mortar stores were already doing, the run-up into the pre-teens was destined to falter.
With the offering shares having appreciated many times over, it was clear that the selling would kill off any rally. The placement shares and warrants represented twice as many as all of the shares outstanding at the time. Any fundamental improvements -- and there would be plenty for Navarre -- would be greeted like a salmon trying to swim upstream as the deluge rained down.
WHERE TO FROM HERE?
Over time, history may forgive and forget. With every passing day it seems that there will be less of the private placement players fueling that pent-up selling demand. That's a good thing because beyond the ill-advised offering there is little not to like in Navarre.
The company turned a profit last quarter, and this despite the startup costs in setting up CDPoint and SoftwarePoint, which were launched two
weeks apart in the month of June. Navarre calls the strategy "c-commerce," the "c" standing for content-enabled. Drawing 20 million page hits a month and 3 million audio listens, the company has the perfect magnet to draw music fans to consider buying the selections they are hearing directly from Navarre.
On July 27, the company announced that it would be spinning off NetRadio, and coming on the heels of the successful debut of Broadcast.com (Nasdaq:BCST - news) , demand should be healthy for the popular website. It's a shame that the private placement has sandbagged the stock's performance. Who knows how high the stock would be trading today if the 7.6 million shares and 7.6 million warrants at rock bottom conversion prices had never come about -- certainly higher than the $20 million in proceeds generated from the deal.
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