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30 Months Ago Large Institutional 13D Shareholder Put Pressure On Geeknet (GKNT) Board Demanding to Unlock Value. Where are the Shareholders Today? IBM, AMZN, RHT, ORCL Bidding War?



August 26, 2010 – Comments (0) | RELATED TICKERS: GKNT.DL , BBY , AMZN

[Update2] Geeknet (LNUX) - Large Institutional 13D Shareholder Put Pressure On Board Demanding to Unlock Value(1). Where is Geeknet now 21 Months Later?  Source: Motley Fool, November 25, 2009. 

Where are the Geeknet (GKNT) shareholders today(30 months later) 

LNUX closed at $1.78 on February 15th, 2008. This article ( Taking the ) was originally published on Monday February 18th 2008.  LNUX closed at $1.37 Thursday, August 26th, 2010In other words, Kenneth Langone's "Partners" have further destroyed Geeknet (GKNT) shareholder value by  23.03% since Trivium made this demand of LNUX nka GKNT Management and its Board of Directors on February 14th, 2008. To put this into perspective, the "Partners" have not only failed to increase shareholder value but have destroyed shareholder value despite the Ohloh and acquisitions, dramatic increases in ThinkGeek revenues/growth, unique visitors to Geeknet owned sites ( ,***) grew appx. fifty (50%) percent from 32 million unique visitors from 1/31/2008* to 48.4M as of July 2010**.

One more time...What Langone should be doing. 

This is/was always a no-brainer. Spin-off the formidable (now over 3M downloads/day) SourceForge/slashdot/ohloh/freshmeat open source ecosystem to either (NYSE:IBM), (NYSE:RHT), (NASDAQ:ORCL), or (NASDAQ:AMZN) via a bidding war while retaining exclusive ThinkGeek advertising rights and perform a ThinkGeek IPO/Secondary raising $100 million + at >= $5/sh (pre reverse-split) under the symbol G33K. Hire a Sr. exec from (NYSE:BBY) or (NASDAQ:AMZN) as CEO and then within one year set up another bidding war between (NYSE:BBY), and the rest of the top 500 Internet Retailers (.)


* Our network of web sites served an average of 32 million unique visitors per month* over the past twelve months (*Source: Google Analytics and Omniture). Source: SEC Form 10-Q filed 3/11/08 for period ending 1/31/2008.

** We serve an audience of 48 million users* each month. (*July 2010 Unique Visitors 48.4M. Source: Google Analytics and Omniture). Source

***  ", the parent company of,,, and, has told employees that it will be closing and This information has not yet been released to the public, but we've heard it from more than one employee...." Source: (June 11, 2010) Famed freshmeat Software Listing Site Bites the Dust


/s/chaosUnplugged, #1 Motley Fool score Leader Red Hat Pick.



(February 21, 2008) See Trivium Capital Management Sends SourceForge a ...... [Trivium Capital Management sends SourceForge a 13D Valentine]



February 14, 2008

Robert Neumeister, Jr. 
Andrew Anker 
Ram Gupta 
Scott E. Howe 
Ali Jenab 
Carl Redfield 
David B. Wright 
The Board of Directors at SourceForge

650 Castro Street 
Suite 450 
Mountain View, CA 94041

Dear Mr. Neumeister, Jr. and The Board of SourceForge,

We are writing to you in our role as a significant institutional investor, Trivium Capital Management. We are the second largest institutional holder of SourceForge. We have asked on many conference calls and discussed with Mr. Jenab the possibility and importance of a stock buyback. We would ask that the Board of Directors discuss this during your next meeting.

In general, while the company has gone through many transformative changes in the past year, the overall business plan execution on the core business has been mediocre, at best. This has resulted in the EV (enterprise value) being a modest $60m with a total market capitalization of $120 million, thereby leaving the equity value of the business at $60m. And this excludes the value in Collabnet which the company can choose to monetize at some point in the future. Clearly, this is unacceptable in terms of the valuation metrics that Wall Street is subscribing to the business prospects of SourceForge. As Chairman and Members of the Board, you have a fiduciary responsibility to enhance shareholder value.

Our suggestion of a buyback versus the company putting itself up for sale is one of respect for Mr. Janeb, Mr. Sobel and the employees on the expectation of better execution of their business plan to monetize the company's strong, sticky websites and customer traffic. On any generally accepted metrics for valuing unique users, Mr. Jenab has opined that the value per unique user to an acquirer could be from $10 to $70 for SourceForge properties (based on market transactions for similar properties). This could result in a stock price between $5 and $15 per share depending on your assumptions. As such, we believe a meaningful buyback is in the best interest of shareholders and the company for the following reasons:

1) In review of 2008-2010 earnings it is highly accretive to EPS.

2) In a sale of the company if would add to the price per share.

3) The company has too much cash both in view of the revenues and as a percent being over 50% of equity value.

4) The company has cash far above their acquisitions needs.

5) It would send a message to investors and company employees that the company believes in itself.

6) It might increase the price per share which would benefit shareholders and help lower the cost of employee retention.

We are recommending that the company do a 10 million share buyback. This would leave the company by the time the buyback it is completed (assuming the stock stays weak) with approximately $40 million in cash more than enough to run the company and do small acquisitions. In addition the company could consider selling the Collabnet holding for more cash to fuel a larger buyback. It is our belief that with all the major changes going on at Sourceforge that a significant acquisition would be disruptive and high risk.

We understand that these are difficult economic times and the company is in a transition period. As a significant shareholder we believe that the company can prosper and improve their long term growth prospects looking forward. We hope the Board will also believe in the long term outlook and initiate a buyback now while the stock is down.

In the event management is unable to execute in 2008, I believe it would be appropriate to seek strategic alternatives.

If I can be helpful in any way please do not hesitate to contact us. Thank you for your consideration.

Yours truly,

Rob Feinblatt 
Managing Partner 

Trivium Capital Management 

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