PLANO, TX – DZS Inc. (NASDAQ:DZSI), a global leader in telecommunications equipment, has finalized the sale of its Network Assurance and WiFi Management software portfolio to Axon Networks Inc. for $34 million, as announced in a recent SEC filing. The transaction, which was completed on Monday, involved adjustments to the purchase price, although specific details of these adjustments were not disclosed.
The sale is part of DZS's strategic move to divest certain assets, as outlined in an Asset Purchase Agreement dated October 16, 2024. The deal with Axon, a Delaware corporation, marks a significant shift in DZS's business focus. The divestiture of the Network Assurance Business is expected to streamline DZS's operations, allowing the company to concentrate on its core competencies within the telecommunications equipment sector.
In addition to the sale announcement, DZS also filed unaudited pro forma condensed consolidated financial statements, which provide insights into the company's financial position following the divestiture. These statements cover the six-month period ending June 30, 2024, and the fiscal year ending December 31, 2023. The pro forma financial information is meant to give investors a clearer view of the company's financials after the sale of the Network Assurance Business to Axon.
DZS, with its headquarters in Plano, Texas, has a history of name changes, formerly known as Dasan Zhone Solutions Inc., Zhone Technologies Inc., and Tellium Inc. The company is incorporated in Delaware and has been a part of the telecommunications industry under the Standard Industrial Classification code for Telephone & Telegraph Apparatus.
In other recent news, DZS Inc. has divested its service assurance and WiFi management software assets to AXON Networks, aiming to refine its focus on core offerings in broadband networking, connectivity, and cloud edge software. Concurrently, DJI, a China-based drone manufacturer, has legally contested its designation by the U.S. Defense Department as a company associated with the Chinese military, asserting that this claim has led to substantial financial damages.
Further developments include DZS Inc.'s impending delisting from Nasdaq due to non-compliance with periodic filing requirements. This is coupled with an executive shift as Chief Financial Officer Misty Kawecki is set to depart at the end of September, with interim CFO duties falling to former Chief Accounting Officer Brian Chesnut.
Despite a 21% year-over-year decline in revenue for the first half of 2024, DZS Inc. has announced an improvement in profitability and a growth in backlog orders during a recent earnings call.
The company's recovery strategy includes enhancing its balance sheet, reducing operating expenses, and leveraging acquisitions to drive future growth, with aspirations to be relisted on Nasdaq.
InvestingPro Insights
In light of DZS Inc.'s recent divestiture of its Network Assurance and WiFi Management software portfolio, InvestingPro data provides additional context for investors. The company's market capitalization stands at $28.91 million, reflecting its current market valuation after the sale.
InvestingPro Tips highlight that DZS is "trading at a low Price / Book multiple" of 0.49, which could indicate potential undervaluation following the asset sale. This metric aligns with the company's strategic repositioning and may interest value-oriented investors.
Another relevant InvestingPro Tip notes that DZS is "quickly burning through cash," which underscores the importance of the $34 million influx from the asset sale. This cash infusion could provide crucial liquidity as the company refocuses on its core telecommunications equipment business.
Investors should note that InvestingPro offers 13 additional tips for DZS, providing a more comprehensive analysis of the company's financial health and market position. These insights can be particularly valuable as the market assesses the impact of DZS's strategic divestiture on its future prospects.
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