If you’ve been following Phoenix Technologies (PTEC), one of our top software turnaround picks, we’re sure you noticed that yesterday Ramius Capital offered to purchase PTEC for $5.25 per share, a 15% premium to our purchase price for the shares back in November 2006.

Today, Phoenix management soundly rejected the Ramius offer. What we found interesting about the refusal of the buyout proposal was that Ramius actually considered offering a slightly higher price for the company.

As PTEC management says:

“We have reiterated to you on several occasions our Board’s confidence in the Company’s potential to yield significantly more value to stockholders than your proposed offers, including your revised offer of $5.30 per share made verbally last week and the $5.25 per share offer made today. “

The implication is that Ramius has been pretty active with regards to PTEC and they are not finished here yet. Shareholders can look forward to an interesting hedge fund vs. management battle in the year ahead.

As for us, we’re holding onto our shares of PTEC and we would be buyers on any dip. We are not surprised that management has refused to accept the Ramius offer. New CEO Woody Hobbs has only come to PTEC recently and has clearly not had enough time to make much of an impact, even though he has already implemented several significant restructuring actions.

Given that the vast majority of Mr. Hobbs incentive options are at about $5 per share, we hardly think that the 5% return will be enough to appease this proven software executive. We remind investors that the last company Mr. Hobbs took over, subsequently rose by nearly 500% after he turned it around and sold it to Nokia. And while we’re not expecting that type of return in the case of PTEC, we surely think the company could be worth far more that $5.25 per share when BIOS revenue begins to recover over the next 12 to 18 months.

Please Note: We first recommended Phoenix (PTEC) at $4.55 per share, and still hold a position in the stock. All ideas, opinions, and/or forecasts, expressed or implied herein, are for informational purposes only and should not be construed as a recommendation to invest, trade, and/or speculate in the markets. Any investments, trades, and/or speculations made in light of the ideas, opinions, and/or forecasts, expressed or implied herein, are committed at your own risk, financial or otherwise.