We don’t really cover Skullcandy all that much anymore because they’re really more of consumer electronic company than they are anything else, but it is interesting to note that thanks to their currently low, low stock price Bloomberg is mentioning today (January 9, 2013) that they are a perfect “takeover target.”
Down 66 percent since it began trading in July 2011, Skullcandy has performed worse than all but seven of the 185 U.S. IPOs completed since its debut, according to data compiled by Bloomberg. The stock sank to a record low of $6.70 last week after Jefferies Group Inc. recommended selling the shares. The company’s enterprise value of 3.9 times earnings before interest, taxes, depreciation and amortization is cheaper than than 96 percent of stocks in the Russell 2000 Index, the data show. . . While increasing competition for in-ear headphones and the company’s move into lower-margin designs prompted the Jefferies downgrade on Jan. 2, Skullcandy shareholder Royce & Associates LLC says its brand may appeal to buyers such as Bose Corp. or Sony Corp. (6758) Even though Skullcandy’s revenue growth has slowed, the shares have fallen more than is justified and that might prompt a takeover, Roth Capital Partners LLC said.
Sony? Bose? What about Monster Cable? Any one of those wouldn’t be a bad exit strategy. Skullcandy shares are, of course, up on all the takeover talk.