Netsol Technologies is facing shareholders activism which may result in a possible sell-off, according to certain insiders.
While the company profits are steady; it posted a GAAP net income of $1.0 million for the first quarter of 2009 with an outlook of 20%-25% annual revenue growth, the shareholders frenzy lacks credibility.
TechLahore, however, has predicted that the company will end up looking for buyers and Systems Ltd. is best suited for the deal. The major reason for this prediction is that Systems Ltd. is a non-listed company thus has no fear of proxy fights and related affairs.
The net result is that Netsol is an absolute steal at the moment. With annual revenues in excess of $20M, today it stands at a valuation of only $24M. Another Pakistani software company that competes with Netsol, Systems Ltd., never did go public. It happens to be Pakistanâ€™s pioneering software company, and one more in long line of robust businesses that were never taken public. Until very recently, Goldman Sachs used to be one of these lucky few, but not-so-much anymore.
Netsol’s annual profits are actually in excess of $36 million and with a market cap of over $26 million and nearly-safe future, I don’t see the reason why the company will sell itself. However, the shareholders do have a control over the affairs and a long and tough proxy fight can lead to that; chances of which are thin.
As for the possible takeover by Systems Ltd., chances are there but it’s too early to reach a conclusion. On an end note, I contacted Netsol for their opinion and they have brushed aside the speculations, though not vigourously. My contact promised to give further details but I am still waiting for it. Something is cooking up there, at least.