Investing in high-tech firms isn't for the faint-hearted.
On one hand, there's a need for eternal optimism that an untested idea will come off, balanced by a clear-eyed realism to pull the plug when things become terminal.
You get a mix of investors with some banking on an idea eventually paying off, and other Johnny-come-latelies seeking a million-dollar payday.
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Rakon has more of the former on its register at the moment, but don't be surprised if the telecommunications components maker starts attracting speculative money again.
The company was billed as a superstar when it went public in 2006, raising $10 million of new capital and letting the founding Robinson family sell a further $56m of stock into the offer.
As a high-tech company building components for GPS devices, Rakon was a novelty at the time, and investors clamoured to get in. The share price soared from the $1.60 initial public offering price to $5.80 the following year, and Rakon was feted as high-tech company of the decade in 2011.
From just 2098 shareholders in May 2006, the register peaked at 6475 in May 2012.
Unfortunately for Rakon, its world-leading technology became a commodity when smartphones exploded, and its debt-funded foray into China came just before the global financial crisis.
The share price tumbled as low as 15 cents, and now it's trading at 27.5 cents, below the 36 cents per share value of its tangible assets.
Shareholders have been voting with their feet while Rakon steadies itself. There are now just 4465 investors on the register, including the Robinson family's 15 per cent stake and Siward Crystal Technology's 17 per cent holding.
Rakon has had to change a lot over the past seven years or so. And to be fair, it's taken control of its supply chain, repaid a ton of debt, and has another year or two of restructuring to get its cost-base under control.
Oh, and it's changed its product mix to focus more on telecommunications – 5G infrastructure in particular – and produces a far greater array of bespoke product components that carry a juicier margin.
One new product line – XMEMS - has managing director Brent Robinson most excited. Rakon claims the quartz product is head-and-shoulders above its silicon-based rivals and will let its telco customers take full advantage of the 5G bandwidth.
Robinson reckons that could be a potential market worth hundreds of millions of dollars during the next five years.
Rakon is miffed that the trade wars have slowed the roll-out of new 5G networks and remain a major uncertainty.
On the plus side, the company weathered the Covid-19 pandemic and the lockdowns have boosted demand for global telecommunications - not just in 5G networks, but also in upgrading existing 4G infrastructure.
The company no longer attracts attention from the major research houses, but there were plenty of people on Rakon's conference call for analysts after the firm last week beat its earnings guidance.
Rakon's underlying earnings before interest, tax, depreciation and amortisation of $14.8m in the 12 months ended March 31, beat its guidance of $12m to $14m. Both bottom-line profit and top-line revenue were stronger at $4m and $119m respectively.
The question for investors is how to lift the share price.
Rakon has been trading below $1 for nine years, and there are plenty of shareholders who paid three or four times that and who've been waiting patiently for the company to get its act together.
The company is trading at 1.9 times revenue, well below the 5.1 median multiple of Australia's tech sector tracked by Jarden analysts, even if they don't follow Rakon itself.
Both the Robinson family and Siward have blocking stakes if a takeover emerged, although that didn't stop the rumour mill in February when private equity firm Crescent Capital was believed to be sniffing around.
Covid put the kibosh on that, but there is a group of shareholders who think the share price is well under-priced and want Rakon's board to at least test the waters to see what potential buyers are willing to pay, even if a deal isn't reached.
Rakon's minorities should be happy that the company might be about to deliver on that promise, but don't be surprised to see some agitation at the upcoming annual meeting for the board to do something about the share price.
The company was always pitched as a growth play – even if it did have to dangle the prospect of dividends to keep some quarters happy. But with the price depressed for the better part of a decade, a canny player with plenty of cash could get a bargain.
And at a market value of $63m, I wouldn't write off the Robinson family as among those willing and able to do so.