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Vecima Networks to buy back shares

City hardware firm feels the stock is trading under value

Citing a market that has consistently undervalued it, Victoria's Vecima Networks filed notice with the Toronto Stock Exchange to acquire for cancellation, by way of normal course issuer bid, up to 550,000 of its common shares.

The company, which designs and manufactures hardware to support digital television and data-over-cable services, has continued to expand and post profits consistently.

Last month, Vecima reported a $7.8-million profit in its first fiscal quarter, ending Sept. 30, based on $36.8 million in sales, well over the $2.2 million it earned over the same period a year ago.

However the stock price (TSX:VCM) of the company closed at $6.39 yesterday, up 54 cents, and has had a 52-week high of $8.38 and a low of $3.75.

"This is what you do when you believe you are trading under value," said Paul Davis, director of strategic initiatives for Vecima. "Any valuations anyone does based on our assets and balance sheet and performance of late -- other than the general market malaise -- we are undervalued."

The bid for as many as 550,000 common shares represents about 2.4 per cent of the issued and outstanding shares and is expected to start Thursday and end Dec. 17, 2009.

Over the last 12 months, Vecima has repurchased 258,400 of its outstanding shares at a weighted average price of $6.23.

"When the principals of the company believe [that it's undervalued], it's usually a signal to the marketplace that [it is], and this is one of the ways to work at getting any of the people wanting out to get out," said Davis, who noted there is some frustration at the reaction of the marketplace. "There are companies that trade higher than us that don't even make any money."

Davis said there has been no consideration of taking the company private -- 75 per cent of its shares are held by founder Dr. Surinder Kumar and his family and Dr. Hugh Wood, Vecima's COO, who has been with the company since its second year in 1990 -- although he notes it is an option.

"We're still committed to the marketplace," Davis said. "But you pay a lot of money to be on the stock exchange and, quite frankly, if the exchange doesn't perform for you, then it [going private] is something people do think about.

"Our struggle has always been getting our story out and getting a simplified enough message so the investor can understand the strength we have."

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