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DailyTrends.com Small Cap Play Alert: New Frontier (NOOF)

Chris Lahiji
Chris Lahiji
Daily Trends.com
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Even though I am not necessarily fond of the business, New Frontier (NOOF) is a cheap stock that should be looked at.

Using its Erotic Networks subsidiary, the company controls several pay-per-view (PPV) and video-on-demand (VOD) channels offering adult entertainment, including TEN and PLEASURE. All of their channels are delivered by cable networks and direct broadcast satellite (DBS) providers.

New Frontier does all the screening, editing, licensing, and programming functions in-house though its office in California, but does not produce any of its own content for its networks.

In addition to TV, New Frontier provides online content through its Ten.com site which has not been doing well recently.

The second quarter results which came out on November 3rd, showed some weakness and a higher tax rate. The Company reported net revenue for the current year quarter of $11.3 million compared to $12.0 million for the same quarter a year ago, representing a decrease of 6%. Net income for the current year quarter was $2.6 million as compared to net income of $3.1 million for the second quarter a year ago, representing a decrease of 16%.

Last month, New Frontier announced the authorization to repurchase up to 2,000,000 shares, or approximately 9% of its outstanding common stock, over the next two and a half years. It also mentioned that they are continuing to review strategic options to enhance shareholder value and expects additional announcements.

In my opinion, this stock looks ripe for a takeover because of the amount of cash it generates. Steel Partners has been adding to their position as of late, and owns almost 15% of the shares. Almost 66% of the business is owned by inveterate institutions.

I do not see much more downside for the stock, given the current buyback and the continued accumulation by Steel Partners.

Chris Lahiji will be available to take your questions until Monday, January 30. Please use the form below to submit your questions.

 
 
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