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Admit it: Six months ago, you had no idea who Robert Pera was, and Ubiquiti sounded like someone mispronouncing a $20 word. But things change. A guy says he wants to buy your local NBA team, and all of a sudden, how his company performs on the stock market . . . well, it matters.

Pera has put his money down to buy the Grizzlies earlier this summer. Almost immediately after that, however, his financial capability came into question when shares of his Ubiquiti Networks plummeted. Earlier this summer, mysterious questions surfaced as to whether Ubiquiti knowingly traded technology with Iran. 

And now? Apparently some of Ubiquiti’s technology has been counterfeited. From Reuters:

Ubiquiti said on Thursday it was facing a group of “very resourceful” former distributors, who know its sales channel and have managed to get the company’s Intellectual Property (IP) in China.

The company said the group has set up manufacturing facilities and placed Ubiquiti’s products in legitimate sales channels, misleading customers to consider fake products as original ones.

Ubiquiti said most of the counterfeiting was in South America, where revenue fell 30 percent to $16.6 million in the fourth quarter from the third quarter.

“We clearly underestimated the magnitude of the company’s challenges as it relates to the prevalence of counterfeit products in the channel and concerns regarding Ubiquiti’s distribution model,” Wedbush analyst Sanjit Singh said in a client note.

Ubitquti’s stock dropped 37 percent overnight upon this news leaking out, down from $15.01 to $9.48 as the market opened Friday, with shares expected to go even lower. As I type this, Ubiquiti is trading at $8:48.Here’s the chart, dating back to mid-May.

Chip is our resident expert on stock stuff. But the fact that Pera’s company has taken so many hits this summer can’t be good for the prospects of purchasing the team. I don’t know if it hurts him (or how badly) . . . time will tell. Stay tuned . . .

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12 Responses to Pera’s Peril: Ubiquiti Rocked By Counterfeiting Scandal; Team Sale in Jeopardy?

  1. theGrizzFanNo Gravatar says:

    Looks like Mr Heisley just made a fast 10 million (non-refundable down payment). The NBA wants their owners to be financially stable, and Pera might not have enough time to get this straightened out. I hope he rebounds from this and his company does well. He has worked very hard but has been robbed. Best of luck to Mr Pera. This is a shame.

  2. oinkyNo Gravatar says:

    Ok Mr. Larry Goldfield, I was right you were wrong, now man up and admit it! And you said I don’t know my way around a balance sheet? I’d rather have a closet full of Charmin!

    • theGrizzFanNo Gravatar says:

      Bad form. You should have waited at least 24 hours before gloating. This is a blow to Grizz nation, and goes far beyond a companies stock disaster.

      • RfoxNo Gravatar says:

        how is it a blow? current ownership seems reasonable capable of maintaining a 5-6th seed playoff team.

        not clear that a guy with deeeeep pockets would do better given the limitations of the Memphis market.

        Since we are just speculating, I could more easily picture a situation where the disadvantage of the small market might make it more attractive for a ‘got his money pretty fast’ type-A person to want to move the team.

        • theGrizzFanNo Gravatar says:

          How is it not a blow? Whenever anyone is selling anything, they are less inclined to make any long term investments with what they are selling. Heisley wants the team sold. There is no question about that. The harder it gets for him to sell the team, the more likely he is to make concessions in the sale. How long until he reaches the point where Ellisons offer looks good to him?

  3. Chris FaulknerNo Gravatar says:

    Anyone surprised that a 34 nouveau riche, wunderkind billionaire isn’t as financially stable as someone like Heisley that has been a billionaire for decades?

    It’s not even fair to compare Pera to Mark Cuban, Cuban was over 40 years old before he ever became a billionaire and bought an NBA team.

  4. presidentjoeNo Gravatar says:

    Just looking at the website of Ubiquiti I would be extremely skeptical of this company. It looks like an amateur put it together. This company is headed for the two dollar a share price by the end of August. There is no way this deal should get approval by the NBA. Guess Heisley will be taking up more offers pretty soon. Sure wish a local could get make a bid that would be accepted. I’m more afraid of Ellinson of Oracle getting back in the running.

    • BillyNo Gravatar says:

      Pres. Joe,

      if you were not taking it in the anus by your boyfriend, you might have more time to research Mr. Pera and Ubiquiti; where you would have realized that this is a great company that provides solid, innovated products.

  5. andywaters901No Gravatar says:

    Where’d you get your finance degree from again, presidentjoe?

  6. presidentjoeNo Gravatar says:

    Just say I do a lot of stock investing, andywaters.
    When a stock plummets over 40% in one day there is something fundamentally wrong. There recent financials were not good to say the least. http://www.fool.com/investing/general/2012/08/10/why-ubiquiti-got-destroyed.aspx
    Other than the weak financials there is the announcement of an investigation concerning possible violations of federal securities laws and breaches of fiduciary duty by officers and directors of Ubiquiti Networks, Inc.
    http://finance.yahoo.com/news/law-firm-wohl-fruchter-llp-212900636.html
    With all the trouble they are in just surviving as a business should be their main focus now not buying an NBA franchise.

  7. neo-realistNo Gravatar says:

    Hey guys, Pera’s not stupid. I’m not saying his application for ownership will be approved, but he probably did account for fluctuations in his stock price when he put the offer in for the team. My guess is that he has deep pocketed investors backing him (and his offer) up. As this article would seem to confirm:
    http://espn.go.com/blog/playbook/dollars/post/_/id/896/prospective-grizzlies-buyer-loses-millions

  8. presidentjoeNo Gravatar says:

    Strange. Not sure why my last comment was held up. Nothing in it that is not already publicly available information on the Web. Nothing against Pera as a potential NBA owner. He may be a lot better than Heisley. But when a company’s market value loses 580 mill in one day and the stock drops almost 43% there is cause for concern if the CEO of said company is wanting to purchase an NBA franchise for 330 mill. Not sure how much stock Pera has in the company but as of yesterday the value of that stock was reduced by almost fifty percent.
    Anyway, glad I am not a shareholder of UBNT. I suspect that there will be an announcement next week from Pera about his NBA franchise pursuit.

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