These past few months, a number of the outsourcing comanies have sold or are now selling their subsidiaries after less than stellar performance these past few months. Some companies are now realizing that they may have bitten off more than they can chew, in what had been previously hailed as the need for divesity in the outsourcings. The most of the recent company to announced the sale of a subsidiary is Michigan based company TechTeam Global who announced the sale of the TechTeam Government Solutions. They are selling TechTeam Government Solutions for $59 million in cash to construction and engineering firm. In a move that was greeted with the surprise by the market.
The deal was not the kind of the needle mover that people expected from the company, the TechTeam Global cites that the reason for the deal is to allow the company to focus on the commercial market. The company stated that in a regulatory filling, they intend to use the proceeds from the sale initially to eliminate their bank borrowings and increase their present cash position.
With the company’s this concurs the current financial position following the release of its 2010 first quarter results wherein the company reported a net loss of $2.7 million with the revenue of $48 million down 14.4 percent as compared to last years $56 million for the same quarter.The government technology services had dwindled since last quarter going down by as much as 25 percent from $20 million to $15 million this year. With the sale offering the company a chance to recoup its losses for the past two quarters at the stage outlook is favorable for the TechTeam with the capability to focus more on enhancing its current remaining services.
REFERENCE:
http://www.blog.infinit-o.com/outsourcing-companies-sell-subsidiaries-bid-specialize-diversify/
