J. Carlo Cannell‘s Cannell Capital holds about 1.70 million shares of Envivio Inc (NASDAQ:ENVI) valued at $3.0 million through its affiliated funds. The holding represents about 6.12% of the company’s outstanding shares. In a recent filing with the Securities and Exchange Commission, Carlo Cannell has outlined his plan for a ‘vote no’ campaign against Envivio Inc (NASDAQ:ENVI), whereby shareholders will be urged to withhold votes in the upcoming re-election of the company’s directors. The fund manager plans to post a lengthy presentation outlining how the current board members have destroyed shareholder value. Cannell plans to follow up with a dissident proxy solicitation in the 2016 election.
Carlo Cannell graduated from Princeton University, and worked at Dakin Securities, an investment bank in San Francisco before he launched his own fund in 1992. The market value of Cannell’s public equity portfolio stood at $319.86 million at the end of the first quarter, with the technology sector representing 33% of the holdings.
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Cannell initiated a position in Envivio Inc (NASDAQ:ENVI) during the second quarter of 2013 with just 54,700 shares, which it built upon in the following quarters. The fund manager’s main contention with the company’s management is fairly obvious. Envivio Inc (NASDAQ:ENVI) has been posting losses for the last three fiscal years, while turning a paltry profit of $140,000 in the year just before the current trend.
Established in 2000, Envivio Inc (NASDAQ:ENVI) is one of the pioneers in the video-over-IP technology that forms the backbone of today’s content delivery businesses. The company’s clients include content owners, telecom operators, and cable & satellite companies.
Although up by nearly 36% year-to-date, Envivio Inc (NASDAQ:ENVI)’s stock has depreciated by more than 21% over the last year. In comparison, the communication equipment industry is up by 1.38% so far this year and 6.93% over the last year. As far as Envivio Inc (NASDAQ:ENVI)’s financial results for the first quarter are concerned, the compay’s net loss per share of $0.02 managed to beat the estimates by $0.02, but revenues of $9.51 million were $1.95 million short of expectations, despite marking an increase of 13.1% on a year-over-year basis. Although sales in the Americas increased to $5.8 million from $3.8 million in the same quarter a year earlier, Europe, Middle East, and Africa’s contribution to the top line shrank by nearly 37%, owing to Europe’s weak macroeconomic environment and the strengthening of the US dollar.
The highlight of the quarter were the video software solutions orders from Time Warner Cable Inc (NYSE:TWC) and Comcast Corporation (NASDAQ:CMCSA), representing 57% of the revenues. Since the software segment of the company is associated with higher margins, the new orders helped Envivio Inc (NASDAQ:ENVI) deliver historically high gross margins of 76%. This was also helped by the cost cutting measures that management has been initiating to help the company move towards profitability. The non-GAAP operating expenses dipped by almost 19% as compared to the same quarter a year before.
The hedge fund interest in Envivio Inc (NASDAQ:ENVI) decreased during the last quarter as five funds had investments in the company at the end of March as compared to six firms at the end of the previous quarter. The aggregate amount invested has, however, increased 20% to $10.43 million from $8.69 million during this period while the stock price appreciated a little over 14%. Edward Gilhuly and Scott Stuart‘s Sageview Capital is the largest stockholder of Envivio Inc (NASDAQ:ENVI) among these, holding some 2.63 million shares valued at $4.67 million.
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