Sometimes, there is almost nothing you can do to make things go the way you want. Sometimes, it all depends on other people, on their judgment and decisions. It might happen that these people just do not like you enough, or they prefer to defend others’ interests instead of yours.
Last Friday, there was nothing that 01 Communique Laboratory Inc. could do to save its shares from drowning. The stock (TSE:ONE), (PINK:OCQLF) crashed badly, loosing almost four-fifths of its value on the Toronto Stock Exchange (TSE). In just one session, ONE tumbled 77.7% down, from $1.79 to $0.40. The disastrous fall was confirmed by a large turnover of 8.4M shares traded.
The main reason for the slump of the shares was a company announcement from the same day. Communique was displeased to inform about the negative development of its patent litigation against LogMeIn Inc.
In September 2010, the company filed a lawsuit against LogMeIn, alleging infringement of U.S. Patent No.6,928,479 (“the 479 Patent”). Last Friday, Communique announced that the Judge in the case ruled in favor of LogMeIn’s summary judgment motion for non-infringement. The company intends to appeal this decision.
Obviously, plenty of traders were disappointed with the news; as a result, the shares were shattered to pieces on the market and sank deeply. The good thing is, however, that they started to recover immediately – the very next day. Yesterday, ONE pulled 45% up, closing the session at $0.58. The turnover was impressive too – more than 6.8M shares changed hands. This is about sixteen times the average trading volume of 430K shares.
It is hard to say whether the rebound of the stock will continue and when it will manage to climb back towards the $2 level, where it was in early March. Despite the sharp downfall of the shares, Communique continues to be well overvalued by investors. The present market cap of the company is approximately $35M, while the net tangible worth of business is $4.2M, as the latest financial reports indicate.
On the other hand, some technical indicators, namely the RSI index, show ONE is oversold. Besides, we should take into consideration that the company looks financially stable enough, with a reported cash position of $4.73M in the end of last January. The negative side of the financials shows a net loss of $0.83M for the quarter ended Jan. 31, 2011. Guess what – more than half of it, around $0.44M, comes from patent litigation costs!
