The past couple of years have been tough for Printronix (Nasdaq: PTNX), a manufacturer of enterprise printer technologies. But yesterday the company announced it was going private in a transaction with investment firm Vector Capital. Despite fetching an 18.3% premium on the deal, the conference call heated up as two callers thought the price tag was simply too low.
As seen with its first-quarter results, Printronix's business tends to be uneven. Revenues came in at $30.6 million, which was a 3.2% decline from the same period a year ago. About 20% of overall revenues come from IBM (NYSE: IBM).
Printronix has tried to find growth in new segments, such as with RFID smart labels, which make inventory tracking easier. The company has formed relationships with various Wal-Mart (NYSE: WMT) suppliers, but it hasn't been enough. The RFID market is still in its early stages.
So with the problems, it's not surprising that the valuation seems low, at about 0.84 times Printronix's trailing-12-month revenues. However, there are really no good comparables for this valuation other than Zebra Technologies (Nasdaq: ZBRA), which sells at about 2.9 times revenues.
On a positive note, Printronix owns a 186,000-square-foot facility in Irvine, Calif. In light of the tight credit environment, this could be a sound source of financing. After all, over the past few months we have seen several buyouts -- such as Harman International (Nasdaq: HAR) and Acxiom (Nasdaq: ACXM) -- disintegrate because of financing problems.
On the conference call, Printronix's management indicated that the buyout process lasted about two years, and there were talks with various strategic parties and private equity firms. To me, that sounds like there was a strong effort on behalf of shareholders.
It's also instructive for Foolish investors. That is, when it comes to small-cap tech companies that continue to struggle, it can be tough to get strong valuations.
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