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Michael Dell Ups Stake in School Specialty Inc
Posted by: guruhl (IP Logged)
Date: June 27, 2012 01:17PM
Michael Dell increased his holding of School Specialty Inc. (SCHS) by 53% last week at an average price of $2.82 per share, according to GuruFocus Real Time Picks. Dell, founder and CEO of DELL Inc. (DELL), the computer company, owns 2,884,499 shares after the purchase.
School Specialty Inc. (SCHS) is a producer and supplier of products for the educational market. In the last year, the company’s stock price dropped 78.4% as earnings shriveled. School Specialty posted net losses in the last two quarters. It also saw three quarters of revenue declines from the July to January quarters, though revenue increased from $85.3 million in the January quarter to $119 million in the April quarter.
The company had been suffering from a weak economy in the education sector. In its fiscal 2012 third quarter, School Specialty’s president and CEO Michael P. Lavelle attributed weak results to “postponed state adoptions and uncertainty in the marketplace related to school budgets and changes in core standards.”
Lavelle echoed similar impacts to earnings in the fourth quarter’s results: “ongoing delays in curriculum purchase as school districts held off buying related to common core standards and pending assessments.”
At the start of the upcoming fiscal year, the company expects an uneven recovery to begin as state and local budgets stabilize and grow, and has completed a debt refinancing of $270 million to position itself to take advantage of potential growth initiatives to turn business around.
Dell has owned shares of School Specialty, his smallest holding, since before 2007. Dell’s largesting holdings are DineEquity (DIN), Wright Express Corp. (WXS) and Macquarie Infrastructure Company LLC (MIC).
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Guru Discussed: Michael Dell: Current Portfolio, Stock Picks
Stocks Discussed: SCHS, DIN, WXS, MIC,