Quirk has Stamps.com asking investors not to buy its shares.MOST companies want investors to buy up as much of their stock as they can handle, short of taking over the company. Stamps.com Inc. is doing just the opposite. The Santa Monica-based Internet postage See PC Postage. provider put out a press release discouraging dis·cour·age tr.v. dis·cour·aged, dis·cour·ag·ing, dis·cour·ag·es 1. To deprive of confidence, hope, or spirit. 2. To hamper by discouraging; deter. 3. investors from acquiring more than 5 percent of the company's outstanding shares. It's not that the company doesn't want investors. It's just that some complex rules governing gov·ern v. gov·erned, gov·ern·ing, gov·erns v.tr. 1. To make and administer the public policy and affairs of; exercise sovereign authority in. 2. the use of net operating loss operating loss The excess of operating expenses over revenue. As with operating income, operating losses exclude revenues and expenses from operations that are not considered a regular part of the business. Also called deficit. Compare operating income. carryforwards--past losses that can be used to offset taxes on future earnings--require the company to satisfy strict requirements or else the carryforwards will be wiped out. The company has been studying the issue since last year. On May 6, it issued a press release saying that Stamps.com "continues to believe it has not undergone a change of control that would trigger an impairment Impairment 1. A reduction in a company's stated capital. 2. The total capital that is less than the par value of the company's capital stock. Notes: 1. This is usually reduced because of poorly estimated losses or gains. 2. of the use of its NOLs." It goes on to request that all investors contact the investor relations Investor relations The process by which the corporation communicates with its investors. department prior to allowing their ownership interest to approach the 5 percent level. Under rules governing the NOLs, a change in control can occur whenever there is a shift in ownership by more than 50 percentage points by one or more shareholders with 5 percent or more of its stock within a three-year period. Stamps.com believes it is approximately 12 percent below the 50 percent level that would trigger an impairment. "If someone were to contact us and say they wanted to purchase an amount of shares that would cause a change of control, we would ask them not to do that," said Seth Weisberg, general counsel for Stamps.com. "We explain to them that it would hurt the value, and I think people would want to cooperate." Weisberg said the company completed a study in October to understand the status of its net operating losses Net operating losses Losses that a firm can take advantage of to reduce taxes. . "What we wanted to do is see if we can avoid triggering this 50 percent level, so we did the study to inform shareholders of where we are," he said. Although Weisberg said the action is not unprecedented, he did say it is a little uncommon. The company was founded in 1996 and has not become profitable. For the three months ended March 31, it reported a net loss of $4.5 million, compared with a net loss of $2.1 million for the year-ago period. The company lost $9.3 million for all of 2003, alter losing $6.8 million in 2002. Weisberg said the company anticipates profitability in the fourth quarter of 2004. |
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