Despite a UK performance that is 40% ahead of target Inter-Tel Inc. announced last Friday it did not meet its second quarter net sales used in projections for its proposed merger with Mitel Networks Corp.
The US-based company announced preliminary net sales for the second quarter ended June 30 of between $113.5 million to $115.5 million, compared to net sales of $115.9 million for the second quarter of 2006. Net sales for the six months ended June 30, 2007 are expected to range from $223 million to $225 million, compared to net sales of $222.8 million for the corresponding six-month period in 2006.
Canadian-based Mitel is trying to acquire the company in a transaction that would take Inter-Tel private. Inter-Tel’s former chief executive and founder Steve Mihaylo, who owns about $125 million worth of the company’s stock, has been fighting the deal. He’s the largest shareholder and doesn’t think Mitel’s offer of $25.60 per share, or $723 million, is the best the company can get.
A special shareholders meeting that was scheduled for June 29 to approve the merger was cancelled. It has been rescheduled for July 23.
Norman Stout, Inter-Tel’s chief executive, stated, “We are releasing this preliminary net sales data to provide more current information to Inter-Tel stockholders as they consider how to vote on the proposed Mitel merger. In particular, we did not meet the second quarter net sales used in the projections in our proxy statement for the Mitel merger, and we also expect to be well below projected net sales for the second half of 2007 and the full year 2007, based on the current sales trends and trajectory.”
Significant variables that could affect sales for the remainder of 2007 include the impact of the emerging competitive landscape in telephony, whether the company is able to increase sales of larger line size systems, whether projected growth targets for smaller size systems sales can be realized, how sales are impacted by the pending Mitel merger, and how the company’s business and results of operations are impacted by the continued expense, distraction and disruption from proxy fights related to the merger.