|Uncertainties in the Air|
Doubts arising from Ideiasnet repositioning bring down the company’s shares
As a company listed in the Novo Mercado of the BM&FBovespa, Ideiasnet acquires stakes in companies in the technology, media and telecommunications sector in Brazil and Latin America. A few months ago, it announced to the capital market an internal restructuring with the goal of repositioning itself as a more active company in the field of portfolio management. What could have been great news, however, has generated certain insecurities among investors who prefer to wait before pricing these changes into the company’s shares. Over the six months ending in April, Ideaisnet shares fell 32%.
The restructuring began last year with a takeover bid (OPA) by a group of shareholders and board members. Moreover, both the EBX and Lorentzen Empreendimentos groups acquired approximately 30% of the company, eliminating the dispersed control structure that previously existed.
The main transformations made by Ideiasnet include a revaluation of its portfolio with the decision to divest from companies such as Addcomm, TVaoVivo and Visionnaire, which were performing below expectations. Behind these changes is an interest in more lucrative returns and more aggressive investments –a characteristic inevitably attributed to the growing stake in the company of Eike Batista’s group.
The current goal is for Ideiasnet to focus its investments on companies earning between R$ 5 million and R$ 40 million per year.
Several new operations were announced by the company during the first quarter of this year: an investment of R$ 35 million in its portfolio (currently composed of 16 companies at different maturity levels) aiming to accelerate the expected return; the acquisition of Relativa and Disec by Automatos; an increased stake in MoIP and Site Blindado; board alteration in some of the invested companies, including the hiring of new managers at Hand and in Spring Wireless; and the launch of the Ideiasnet Receivables Investment Fund (Ideiasnet FIDC). In April, the company announced a capital increase of R$ 50 million with the issue of 14.2 million new ordinary shares. These resources will enable all investments scheduled for 2010.
“Ideaisnet is tracing a strategy in order to become more proactive towards the market, but we know that the impact on results will not come at once”, says Jacqueline Lison, an analyst for Fator Corretora. For now, investors are still digesting the losses presented last year by the companies in which Ideiasnet invests. Aiming to demonstrate the portfolio’s real value and formalize the previous financial investments made in companies with negative net equity, Ideiasnet adopted a new accounting policy. The increase in transparency, however, came with a price: recognition of a R$ 46.3 million loss in 2009.
Last year, the operations of Ideiasnet's main target companies – which account for 95% of the company’s results – suffered severely with the effects of the global financial crisis. The cash flow of software, hardware and broadband companies suffered from the market's prevailing decision to postpone investments. Officer and Softcorp watched their results plummet. PadTec, a broadband equipment vendor, suffered a harsh blow not only from the crisis but also from a drop in sales due to the integration of Oi and Brasil Telecom. “In early 2009, sales to this client were practically inexistent. This ended up considerably affecting the company’s results”, Lison says.
In the first quarter of 2010 there are already some signs of a recovery in revenue, but margins remain low. Net revenue reached R$ 237.8 million in January-March, presenting a growth of 19.8% in comparison to the same period in 2009. This result is primarily due to the positive performances of Officer and Padtec. Officer knew how to take advantage of increased demand for computer science products in the corporate market. It achieved a growth of more than 17% in revenue and 10% in Ebitda (earnings before interest, taxes, depreciation and amortization) compared to the same period last year. Padtec, in turn, has been able to maintain its leading position by launching new products. It recorded a growth of more than 100% in revenue and an Ebitda with a very attractive margin.
Ideiasnet recorded a loss of R$ 2.4 million for the first quarter 2010, compared to minus R$ 6 million during the same period last year.