The fixed-line phone business for telecoms is archaic, with the popularity of wireless devices encouraging consumers to save a few bucks and yank their old phones from the wall.Getty Images
After two years of trying to get noticed on the Nasdaq, one well-established Canadian tech company thinks it might get a little more love back home. The question is, can Mitel Networks Corp.'s TSX listing make enough noise here to attract sleepy investors?
Rich McBee, president and chief executive officer of Mitel, believes that Wednesday's listing will do just that. "In the U.S., the reality is that it's kind of hard to get attention. Down on the Nasdaq, you're a small company if you do less than a billion," said Mr. McBee. (Mitel, which is a business software and services company focused on communication from IP phones to conferencing tools, did more than $600-million in revenues last year.) The company sees the move as a golden opportunity to trade where people already know, and will study, the company. "We're already kind of a big deal up here in Canada," Mr. McBee adds.
While Mitel has been making noises about a TSX listing for the two years it has traded in the U.S., recent research told the firm that now is the time to actively seek investor attention in Canada. Of course, it could also have something to do with recent climbing profits.
This listing could be seen as a glimmer of light on the Canadian tech industry's darkening horizon. In the past year, investors have watched many players disappear from the TSX as they get snapped up by other international players who recognize their potential and are willing to pay for it handsomely. For example, earlier this year, two of the country's major tech firms, Gennum Corp. and RuggedCom Inc., were acquired. At the time, we noted that keen buyers offered up a hefty premium for these companies-- evidence that these stocks were seriously undervalued by the market.
This isn't a new trend, but it's one that hasn't yet showed signs of abating. Last year, the well-established tech firm Zarlink Semiconductor Inc. disappeared when it was bought for a significant premium.
Even if investor eyes aren't laser-focused on the tech space right now, Mr. McBee believes they might at least be more attentive than those of our southern neighbours. When the company listed itself on the Nasdaq in April of 2010, the IPO was made at $14 per share. Today it's a few dimes above $4--a precipitous decline--and hardly skipped a beat when a solid annual report was released in mid-June.
Mitel, which was founded in 1973, has been a multi-faceted business over the course of its history and has close ties to Zarlinks. In fact, the semiconductor company used to be a part of Mitel Networks before being spun out into its own company in 2002. The company also split from BreconRidge (the electronics manufacturer) at this time, cementing its focus on communications.
But as the available stocks on the TSX shrink, so too might the public interest in the sector. Today, the Mitel news release notes that 175 technology companies are listed on the TSX and TSX Venture Exchange combined. The two have a combined market cap of roughly $36-billion.
Mitel, for its part, has beat its guidance to the street for the last five quarters and Mr. McBee--who's only been with the company 18 months-- is hopeful that this momentum will translate to investors. "When they study Mitel and look at how we're performing I think people will get on board with the stock," he says.
To that end, there may soon be news that brings Mitel to the fore. Mr. McBee is firm that the company isn't for sale, but rather looking for ways to be a "consolidator, not a consolidat-ee." Mitel is now actively looking for possible collaborations in the communications space. "But I can't tell you more or you'd know exactly who we're looking at," Mr. McBee said.