In the most recent quarter, LMN’s organic growth was quite weak at -12%, much larger than the previous quarter of only -3%. In the Q2 public filings, management explains that the negative organic growth was due to the current quarter carve-out acquisitions, as well as other recent acquisitions that are going through integration and onboarding. Consequently, leading to a deduction in organic growth, as LMN re-evaluate contracts and projects.
LMN’s acquisition targets are software businesses in the media industry, not necessarily any assets in TV and broadcast. For example, LMN acquired the asset and service management platform from Nokia earlier this year. Also, similar to CSU in the past acquiring a declining asset could sometimes make sense if the valuation is extremely attractive (not very often), if a business is declining but LMN could acquire for a P/E of 2x or 3x, then it still makes sense to do the acquisitions. One quarter does not make a trend, and we think investors need some patience for LMN to improve operations.