Before making the final decision to liquidate the company, StorageNetworks says it, along with its investment bankers, evaluated a number of alternatives -- including selling the company to a third party and acquiring technologies, or companies with technologies -- as well as its prospects if it were to continue as an independent software vendor (see StorageNetworks Seeks Buyer). But in the end, the companys board decided that liquidating the business was the best way to "maximize shareholder value." By distributing excess cash, the company says it should be able to give each shareholder between $1.60 and $1.70 per share.
Investors were apparently happy with the companys decision. Following the news this morning, StorageNetworks saw its shares climb more than 14 percent, to $1.46 a share. The market optimism could be because the company ended its last quarter on a positive note, actually swinging to a profit on $23 million in income from discontinued operations. StorageNetworks today reported earnings for its second quarter of 2003 of $19.3 million, or 19 cents a share, compared with a loss of $5.5 million in the year-ago quarter. Revenue for the quarter, meanwhile, fell to $327,000, from $1.3 million a year ago.
As of June 30, the company said it had $197.5 million in net cash (total cash, restricted cash, and investments, minus capital lease debt), which is an increase of $3.5 million from March 31. In the same time period, the company also says that it managed to reduce its total liabilities from $27.3 million to $24.9 million, largely due to its vacating office space.
The companys general counsel, Dean Breda, will take over the day-to-day responsibilities of president and CEO during the liquidation period, the company said.
Eugénie Larson, Senior Editor, Byte and Switch