Hedge Funds Launch Activist Tag-Team Attack On Struggling Industrial Supplier

The 13D filing in question indicates that the freshly-formed activist group’s belief is that the shares of Itron Inc. were undervalued at the time of purchase and represented an attractive investment opportunity. The group outlined that the technology company has potential to rationalize its operations in order to enhance profitability, but also suggested that potential strategic alternatives, which can theoretically include a potential sale or merger, might unlock great shareholder value. The public filing also indicated that the group may make proposals to Itron regarding the ownership structure, board structure, subsidiary structure, or operations of the company, among other things. The management of the technology company did approve restructuring projects for its Electricity business and its related general and administrative activities, including several Gas and Water activities in November 2014, that were intended to enhance its operational efficiency and reduce expenses. Therefore, it appears that the activist group does not believe Itron’s management has made the most of these projects, which include the consolidation of certain facilities, along with the reduction of its global workforce.

Let’s now take a quick look at Itron Inc. (NASDAQ:ITRI)’s financial results for the second quarter. The technology company reported revenues of $470 million, compared to $489 million reported in the same period a year ago. The company’s top-line was negatively affected by foreign exchange headwinds, which impacted revenues by $50.2 million. Itron’s diluted loss per share came to $0.37 for the quarter, compared to a loss of $0.24 reported a year ago. The company’s ten largest customers generated 23% of its total revenues in the second quarter.

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