Quirk Has Stamps.com Asking Investors Not to Buy Its Shares
Most companies want investors to buy up as much of their stock as they can handle, short of taking over the company. Stamps.com Inc. is doing just the opposite.
The Santa Monica-based Internet postage provider put out a press release discouraging investors from acquiring more than 5 percent of the company’s outstanding shares.
It’s not that the company doesn’t want investors. It’s just that some complex rules governing the use of net operating loss carryforwards past losses that can be used to offset taxes on future earnings require the company to satisfy strict requirements or else the carryforwards will be wiped out.
The company has been studying the issue since last year. On May 6, it issued a press release saying that Stamps.com “continues to believe it has not undergone a change of control that would trigger an impairment of the use of its NOLs.”
It goes on to request that all investors contact the investor relations department prior to allowing their ownership interest to approach the 5 percent level.
Under rules governing the NOLs, a change in control can occur whenever there is a shift in ownership by more than 50 percentage points by one or more shareholders with 5 percent or more of its stock within a three-year period. Stamps.com believes it is approximately 12 percent below the 50 percent level that would trigger an impairment.
“If someone were to contact us and say they wanted to purchase an amount of shares that would cause a change of control, we would ask them not to do that,” said Seth Weisberg, general counsel for Stamps.com. “We explain to them that it would hurt the value, and I think people would want to cooperate.”
Weisberg said the company completed a study in October to understand the status of its net operating losses.
“What we wanted to do is see if we can avoid triggering this 50 percent level, so we did the study to inform shareholders of where we are,” he said.
Although Weisberg said the action is not unprecedented, he did say it is a little uncommon.
The company was founded in 1996 and has not become profitable. For the three months ended March 31, it reported a net loss of $4.5 million, compared with a net loss of $2.1 million for the year-ago period. The company lost $9.3 million for all of 2003, after losing $6.8 million in 2002.
Weisberg said the company anticipates profitability in the fourth quarter of 2004.
Karey Wutkowski
Spending Spree
Shop ’til you drop that’s an attitude California is living up to.
In the past 10 years, state residents have radically increased their spending on consumer goods by roughly $4,000 per person, with taxable sales rising to $12,491 per capita in 2002, according to the State Board of Equalization.
The 2002 figures are the latest available.
Not surprisingly, the biggest purchases are still made at car dealerships, which captured the largest sales increase because of the high price tags of new and used vehicles.
Vehicle registration data shows that Californians are replacing their cars sooner, on average, than they did 10 years ago. Now the median age of cars is about five years, compared with six and a half years in 1993.
In addition, consumers gobbled up goods at general merchandise stores, building suppliers, office suppliers, eating places, service stations, home furnishing stores. These categories plus personal services accounted for 60 percent of all growth in taxable sales in 2002.
Nationally, retail sales in the general merchandise category (excluding gas, automobiles and restaurants) rose 9.3 percent in April from year-ago levels, according to the National Retail Federation. However, sales fell 0.5 percent from adjusted March levels.
The trade group said sales of home furnishings, driven by refinancing activity, along with electronics and appliances all rose, while clothing and accessories declined.
Kate Berry
New Money
Accruent Inc. of Santa Monica, a contract management software company, has received a $12 million round of venture capital funding led by Granite Global Ventures of Menlo Park. Earlier investors also contributed to the latest round. They include Sierra Ventures, Pequot Venture Partners, Innocal Venture Capital, Red Rock Ventures, Constellation Real Technologies and Peninsula Equity Partners.
In all, Accruent has raised more than $35 million in capital since its inception in 1995. The funds will be used for product development, sales and marketing as well as possible acquisitions, the company said in a press release.
Kate Berry
