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gnulaw (52.06)

[Update1] Geeknet (GKNT) Q3 Numbers Release Date Nov 4. Extraordinary Gain Pending?

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October 22, 2010 – Comments (4) | RELATED TICKERS: IBM , GKNT , AOL

Geeknet (GKNT) Q3 Numbers Release Date Nov 4 (1). Extraordinary Gain pending re: ohloh.net and Collabnet?

A. Black Duck Software Acquisition of ohloh.net ref/ [Update2] Geeknet (GKNT) Announces Sale of Ohloh.net to Black Duck Software. What's Next for SourceForge.net and Slashdot.org?

B. Geeknet's (GKNT) Nine (9%) Percent Ownership of CollabNet?
Geeknet's (GKNT) nine (9%) percent ownership of CollabNet (2, 3, 4, 5, 6, 7). Could an extraordinary gain be pending (in the event of a HP, IBM...acquisition of CollabNet)?

 

References:

1. (October 22, 2010) Geeknet Sets Third Quarter 2010 Financial Results Release Date. Source: Geek.net. "...Geeknet is the online network for the global geek community. Our sites include SourceForge, Slashdot, ThinkGeek, Geek.com, and freshmeat. We serve an audience of nearly 51.3 million users* each month and provide the tech-obsessed with content, culture, connections, commerce, and all the things that geeks crave. Want to learn more? Check out geek.net(*September 2010 Unique Visitors 51.3M Source: Google Analytics and Omniture)..." [Note: versus 48.4M July 2010]

2. (October 11, 2010) CollabNet Named an “Innovative Application Development and Deployment Company Under $100M to Watch” by Leading Analyst Firm.

3. (August 5, 2010) SEC Form 10-Q for the period ended June 30, 2010. "...At June 30, 2010, the Company owned approximately 9% of CollabNet consisting of CollabNet’s Series C-1 preferred stock.  As the Company holds less than 20% of the voting stock of CollabNet and does not otherwise exercise significant influence over them, the investment is accounted for under the cost method.  CollabNet is a developer of software used in collaborative software development...".

4.  (June 08, 2009) SourceForge Files fy'09 10-Q...Ohloh Acquired for $2.6M, 3.7M Shares Repurchased...$4.6M Impairment loss re: Collabnet. "...For the three months ended March 31, 2009, the Company recorded an impairment loss of $4.6 million related to its investment in CollabNet, which is included in interest and other income (expense), net...".

5.  (April 30, 2009) Is SourceForge.Net [and or CollabNet] in IBM's [and or HP's] Sites With Latest DeveloperWorks News?

6. (April 24, 2007) CollabNet® and VA Software [GKNT] Sign Asset Purchase Agreement for Acquisition of SourceForge® Enterprise Edition Business by CollabNet.

7. (April 10, 2007) CollabNet Partners With Ohloh to Bring Project Dashboards to Public and Open Source Development Communities Powered by CollabNet.

The Scott Collison-Geeknet-Ohloh link and part of Langone's Endgame?

4 Comments – Post Your Own

#1) On October 22, 2010 at 10:35 PM, BeachWeb67 (94.04) wrote:

Do you know if GKNT is eligible to sell off or merge some of the Net Operating Losses for the company from the past decade? This usually gets bankers very interested in taking over small companies.  VA Linux/SourceForge/Geeknet had over 500 million in Net Operating Losses since 2001 and I don't see where a change of ownership has occured  that would disqualify the Net Operating losses from being used (pretty sure Langone and his partners have not hit the threshold nor have their been additional equity offerings of 50% over the last decade). If eligible, these losses can be carried forward for 20 years to offset income. I have not heard anyone mention this so maybe I am missing something and the  NOLs that Geeknet has to work with are limited. And I assume if they were eligible then the stock would be trading much higher?

"Under Section 172(b) of the Internal Revenue Code of 1986, as amended (the “Code”), net operating losses (“NOLs”) can be carried back to the two prior taxable years and carried forward to the succeeding twenty years."

Some of the accumulated losses by the company....

 http://moneycentral.msn.com/investor/invsub/results/statemnt.aspx?Symbol=GKNT&lstStatement=10YearSummary&stmtView=Qtr

 I suggest reading up on the Liberty Media / Sirius arrangement that is occuring right now. Sirius has around 8 billion in Net Operating Losses that are worth accoring to analysts around 2.3 billion in the event that Liberty takes a 49.999% stake in Sirius (50% would limit the NOLs because of change in ownershrip).

http://satelliteradioplayground.com/2010/10/14/sirius-xm-siri-lazard-capital-reiterates-buy-rating-raises-price-target-to-1-65/

Thanks, I enjoy how closesly you follow the company. Keep up the good work.

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#2) On October 24, 2010 at 2:17 PM, BeachWeb67 (94.04) wrote:

I just had to go to the annual filing for 2009 to get the info I was looking for regarding Geeknet...


"As of December 31, 2009, we had $267.0 million of federal net operating loss carry-forwards available to offset future federal taxable income, which expire at various dates through 2029. Approximately $23.2 million of federal net operating losses usage is limited pursuant to section 382 of the Internal Revenue Code due to certain changes in our ownership which occurred between 1996 and 1999, and a change in ownership resulting from our June 2000 acquisition of Andover.net. We also have California net operating loss carryforwards of approximately $83.2 million to offset future California taxable income, which expire at various dates through 2017. We have not recognized any benefit from these net operating loss carry-forwards because a valuation allowance has been recorded for the total deferred tax assets as a result of uncertainties regarding realization of the assets based on our limited history of profitability and the uncertainty of future profitability."

So only 23.2 million of the 267 million is limited. That is good news.
 
And I found this regarding "Valuation Allowance" in some online tax readings.....
 
"FAS-109 also requires that a company establish a valuation allowance (similar to the allowance for doubtful accounts) when management believes it is more likely than not that some or all of a deferred tax asset will not be realized. Thus, management is required to assess the probability that the company's NOLs will generate tax savings and reduce the reported deferred tax asset whenever there is a greater than 50 percent probability that some or all of the NOLs will expire unused. Consequently, a significant amount of management judgment is required in this area and potentially provides yet another earnings management opportunity, particularly given the weak internal controls that apparently plague so many companies in the tax-reporting area."

Langonne might have a creative way to unlock the value of these.

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#3) On October 26, 2010 at 5:20 AM, gnulaw (52.06) wrote:

Well Done BeachWeb. And if anyone would be in a position to capitalize on their NOL it would be Langone and part of his endgame.

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#4) On October 26, 2010 at 2:28 PM, BeachWeb67 (94.04) wrote:

Look at the volume today ....huge buyer in the afternoon.

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