Q: Did not have an opportunity to hear what ECN had to say about their earnings and possible sale of the company. Was there any indication of what direction the strategic review might take and possible timing of any announcement.. Secondly if a takeout does not occur is there anything in terms of future guidance that would provide support for the shares around current levels? Current results appear rather tepid and my concern is that shares could tank without positive news from the strategic review. What is your sense as to what direction the strategic review might take?
5i Research Answer:
Earnings have been tepid and the stock has already been impacted. ECN has indicated August as a timeframe for the next announcement. Here are our comments on the last quarter. We are not covinced that a sale will be the outcome. We think the valuation gap is too large and management is probably not ready to throw in the towel. A merger might be more likely. But we do not think a 'nothing happening' decision will really impact the stock much at this point.