BakBone Calls a Reverse

BakBone Software Inc. (Toronto: BKB) wants its stockholders to approve a reverse split in hopes of beating a rival backup software company to a Nasdaq listing.

Bakbone today filed a proxy statement with the Securities and Exchange Commission (SEC) calling for a special meeting April 29 to seek approval for a reverse split. If approved, BakBones board of directors can effect a reverse stock split any time during the next year at up to a 5-to-1 ratio. The goal is to reduce the number of shares and raise the stock price. BakBone is traded on the Toronto Exchange, but cannot be listed on Nasdaq until it achieves a minimum bid price of $5.00 per share. BakBone’s stock opened at $3.73 today.

“The listing of BakBone's common shares on a major United States trading market such as Nasdaq is an important corporate objective of the company," BakBone CEO Keith Rickard said.

In its proxy statement, BakBone said it will probably pursue a Nasdaq listing and public offering. The company gave a hint of its strategy Jan. 26 when it added IPO veteran Bruce Nakao to its board of directors. Nakao was CFO of Ask Jeeves when it went public in July 1999 (see Bakbone Adds to Board).

BakBone competitor CommVault Systems Inc. is also expected to go public within a year (see Window of Opportunity). The race is on; the company that shoots for a Nasdaq IPO first could be at a big advantage. “The first pure-play backup software vendor to hit the market will make a dent. The second one will have less of an impact," says financial analyst Steve Berg of Punk Ziegel & Co.Although BakBone is a small fry with little brand recognition among giants such as Veritas Software Corp. (Nasdaq: VRTS), Legato Software, IBM Corp. (NYSE: IBM), Computer Associates International Inc. (CA) (NYSE: CA),and Hewlett-Packard Co. (NYSE: HPQ) in the backup-and-recovery space, the company gained momentum in the last year, particularly in the growing Linux and disk backup markets (see SAN Vendors Scope Linux). It reported net income of $603,000 or $0.01 EPS in its December quarter after losing $2.2 million or $0.04 in the same period the previous year. BakBone’s revenue of $7.9 million for the quarter was 61 percent higher than the $4.9 million in revenue from the previous year. With three straight profitable quarters, the company has erased nearly all of its $2 million debt from a year ago.

BakBone also scored impressive wins with Yahoo Inc. (Nasdaq: YHOO) and Toyota, replacing Veritas at Yahoo (see Yahoo Picks BakBone ). Network Appliance Inc. (Nasdaq: NTAP) is pushing BakBone software with its NAS systems as an alternative to Legato, which is owned by NetApp hardware rival EMC Corp. (NYSE: EMC). Along with NetApp, BakBone has significant OEM deals with NCR Corp.

and Sony Corp. (NYSE: SNE).

— Dave Raffo, Senior Editor, Byte and Switch