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Tuesday, September 21, 2021

Communications Systems Inc. (JCS) Stock Surges Following Announcement of Special Dividend

Communications Systems Inc. (JCS) stock prices were up by 0.59% as of the market closing on September 13th, 2021. This brought the price per share up to USD$6.79 at the end of the trading day. Subsequent premarket fluctuations saw the stock surge by 30.49%, bringing it up to USD$8.86.

JCS Stock Announces Dividend

September 13th 2021 saw the company’s board of directors declare a special dividend of USD$3.50 per share. The dividend will be payable on October 15th 2021 to shareholders of record of JCS stock at the close of the business on September 30th 2021. The aggregate amount of the special dividend is roughly USD$34 million. It will be funded from the net proceeds of the sale of the company’s Transition Networks and Net2Edge businesses. These businesses comprise substantially the entirety of the assets of JCS stock’s Electronics & Software Segment to Lantronix Inc. The transaction closed on August 2nd 2021, with the company’s existing cash on hand consolidating the funding of the payment of dividends.


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Focus on Shareholder Value

The company’s board of directors have been very active over the last several years. They have explored and implemented strategic initiatives to facilitate increases in shareholder value. The company’s announcement of its merger agreement with Pineapple occurred on March 2nd 2021. Concurrently, JCS  stock consolidated their shareholders as their top priority. This mindset resulted in ensuring increases in shareholder value from the monetization of the legacy JCS stock’s businesses and assets. These gains would be delivered prior to the merger through special dividends. After the merger, the increase in returns would be facilitated through the contingent value rights (CVRs).

Collaboration with Pineapple

JCS stock determined their ability to deliver higher aggregate returns to its shareholders as a substantial part of the JCS-Pineapple negotiation process. This would be facilitated by the monetization of each business and asset on the basis of the company’s unique value proposition to a potential buyer. This is in lieu of selling the entire legacy businesses as a whole. The company intends to continue seeking opportunities for its Software and Services business segment.

Future Outlook for JCS Stock

The company reported stellar recent quarters, as tangibly evidenced by the declaration of its special dividends. JCS stock is poised to capitalize on the momentum generated with this move as it aims to maintain steam through the upcoming quarters. Current and potential investors are hopeful that management will be able to leverage the resources at their disposal. This is hoped to facilitate significant and sustained increases in shareholder value.

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