1. How to use GuruFocus - Tutorials
  2. What Is in the GuruFocus Premium Membership?
  3. A DIY Guide on How to Invest Using Guru Strategies
Cody Eustice
CodyEustice
Articles (559)  | Author's Website |

Integrated Surgical: Selling At A 40% Discount To Liquidation Value

January 30, 2015 | About:

Company Overview

Integrated Surgical Systems (ISSM) was incorporated in Delaware in 1990, and was founded to design, manufacture, and sell robotic surgical tools. The company use to manufacture computer-controlled robotic software and harward to be use in orthopedic surgical procedures. Integrated Surgical was one of the earliest companies in the field of of surgical robotics On June 26, 2007 the firm completed a sale of its assets. After its sale of all its assets the company became inactive, and no longer engaged in any business activisties related to its former operations.

Business Overview

The same day the firm sold of of its assets shareholders approved the liquidation of the firm if the firm is unable to completed an aquisition or an similar transaction within one year. With the approval the shareholders also granted the board the authority to delay, revoke or abandon any decision to liquidate the company without any further shareholder say. Integrated Surgical board has decided that its not in the interest to liquidate the company. Currently the company's operations are limited to raise funds to be maintain the company's public status.

Stake In ClearSign Combustion Corporation (NASDAQ:CLIR)

Integrated Surgical on April 20, 2011 purchased 363,636 share of ClearSign Combustion Corporation (NASDAQ:CLIR) for a purchase price of $1,000,000 or $2.75 per share. Due to a 1.25 for one stock split which increase the company's stake in the firm to $454,549 shares.ClearSign Combustion a clean energy company focus of creating technology to increase energy efficiency in most type of industrial combustion systems. The firm went public on April 25, 2012 in initial public offering price of $4.00 per share. Integrated Surgical before ClearSign public offering declared a dividend of 450,000 of the total amount of shares ClearSign shares owned by the company. The company will paid out the dividend pro rata to all holders of Integrated Surgical at a rate of 0.054 of each share issued and oustanding.

Valuation

1422580626634.png

Integrated Surgical is loss -$250,000 a year operating the firm that has no operations. Just keep the company open is a extreme cost. Clearly the last few years keeping the company open has run nearly a $1,000,000 dollars while the company try to find a merger, or acquistion. The board and management on 33% of the company and by liquidating the company they and shareholders will receive an instant 64% return over market value. With no employees the company has material weak internal control over financial reporting that was discovered last year. The company shouldn't spend more of shareholders money hiring more people to prevent this. Integrated Surgical has had four years an been unable to find a merger, or similar transaction so the company should liquidate the firm, giving themselves and shareholder a 64% return.

The CEO said in a letter in 2012 that, As a fellow shareholder and CEO, my message is rather straightforward; I’m here to increase shareholder value. The question is “how is best to do that?” Our strategy going forward is to either merge into an operating company that we feel has great prospects or liquidate our assets and distribute out the remaining cash if such a suitable target cannot be located

The company is selling at 0.6x book value and selling at 0.67x liquidation value. Integrated is also sell for less then 1x its earnings. With the firm selling for less then liquidation value and less then 1x earnings should liquated itself. The only good thing the firm did for shareholders was distribute its stake in ClearSign to all shareholders as a dividend. Just staying open is destroying shareholder value maybe not in the short term but in the long-term $250,000 a year to operating as up over time. The benefit of staying open doesn't out way the cost of doing its. With the stock selling at $0.15 cent per share would it not be in the Board fiduciary duty to liquidate the company giving the owners their money back an let them decide how they want to spend its.

About the author:


Rating: 0.0/5 (0 votes)

Comments

Please leave your comment:



Performances of the stocks mentioned by CodyEustice


User Generated Screeners


pjmason14Momentum
pascal.van.garsseHigh FCF-M2
kosalmmuse6
kosalmmuseBest one1
DBrizanall 2019Feb26
kosalmmuseBest one
DBrizanall 2019Feb25
kosalmmuseNice
kosalmmusehan
MsDale*52-Week Low
Get WordPress Plugins for easy affiliate links on Stock Tickers and Guru Names | Earn affiliate commissions by embedding GuruFocus Charts
GuruFocus Affiliate Program: Earn up to $400 per referral. ( Learn More)