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PeaceDog

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PeaceDog

Re: None

Tuesday, 01/24/2006 12:25:24 PM

Tuesday, January 24, 2006 12:25:24 PM

Post# of 157299
My email to Seth Jayson:

Dear Mr. Jayson,

I’ve read with interest your recent articles about Globetel. As an investor in Globetel, I try to be vigilant in finding any information I can about the company. You have some good points, but I have to tell you, I find your articles tend to reach too far to try to implicate Globetel in subterfuge. When I see you trying too hard to impugn the company, I must question you. For instance, you try to discredit the company by saying, “Of the 30 cities claimed for the rollout, only two are named.” What would naming 28 more cities do? Would that prove anything? No. So why is it a part of your complaint? Any fool could go to the atlas and find the names of 30 Russian cities.

You say, “The real identity of GlobeTel's Russian investors remains a mystery”, when the Russian press has clearly identified Suleiman Kerimov (use http://www.systransoft.com/index.html to translate the web pages http://www.b-online.ru/articles/a_10566.shtml and http://www.ispreview.ru/inews2449.html). Those articles quote Anton Averin of Nafta-Moscow as saying that they are making the investment. Kerimov controls Nafta-Moscow.

You say, “Especially since GlobeTel seems to have no technological advantage, as evidenced in its regulatory filings, where it explains that the equipment and software it uses are readily available from major suppliers on the open markets?” I can only assume you are referring to this statement in several of Globetel’s 10-Qs:

“The Stratellite(TM) will allow subscribers to easily communicate in "both directions" using readily available wireless devices.”

Your statement is really laughable. Globetel is saying that there are any number of communication devices that are available on the open market that would work if based on a Strattelite and you extrapolate that to mean that a WiMax base station is readily available on the open market. You’ve discredited yourself twice with the one statement. First, you’ve obviously twisted the intent of Globetel’s message and, second, you’ve stated that you believe that WiMax technology can be easily bought on the open market right now.

You say, “Never mind that the Internet-broadcast blimp is already a decade-old bad dream.” I’m quite certain that you know that the U.S. Government has a contract with Lockheed-Martin to develop just such a “blimp”. The U.S. military is absolutely salivating over a vehicle like the Strattelite, as observed in these links: http://www.airpower.maxwell.af.mil/airchronicles/apj/apj05/win05/tomme.html, http://www.rand.org/pubs/technical_reports/2005/RAND_TR234.pdf#search='High%20Altitude%20Airships', and http://www.onr.navy.mil/nrac/docs/2005_tor_lighter_than_air_flag_brief_final.pdf. Why does the military want them? No, it’s not so the military can offer broadband to the public. It’s because these airships make near ideal communications platforms. That Sanswire sees the commercial potential is hardly a knock on them.

You say, “Does anyone really think that established wireless giants like Mobil Telesys or VimpelCom (NYSE: VIP) -- which together account for some 90 million subscribers in the former Soviet states -- are simply going to let some upstart come in and eat their lunch?” First, I’ll educate you a little bit about WiMax. Devices were certified as WiMax devices for the first time just this week. What Globetel is selling as WiMax is usually called pre-WiMax, because, although it is a form of WiMax, it hasn’t been officially certified to the standard. That couldn’t happen before now because, as I just stated, they just started certifying devices. So using this technology at this point, is a bit risky. If you fail certification as is, you either have to go back and modify all of your equipment to be compliant or you have to exist solely on your own equipment, which is fine, but customers might not like the lack of choice in hardware. Many big companies, like the ones you cite, would rather wait until they can get the officially certified technology. Many others, like Verizon here in the states, have taken the gamble and begun rollout. Combine that information with the fact that the companies you state already have a large amount of existing infrastructure that they’re not dying to replace and the $600M it would apparently take to make that replacement and you can see why those companies might move a little sluggishly.

Now, you probably know much more about the financial dealing you cite in the article than I do, but it looks to me like Globetel made a profit on the transaction as well as acquiring all of the networking equipment of CGI. I admit the transaction looks a little “creative”, but I’m not sure I can really complain about a net profit with some hardware thrown in to boot. It looks to me like they had some plans that weren’t coming to fruition, saw that because of increases in the price of their stock, they could jettison the deal and make a little profit. Your article states that all of the shady dealings associated with ATC/CGI happened in or before 2002 and GTE bought what would have been a distressed company in 2003. It is disconcerting that GTE didn’t fully disclose that information to its shareholders, I agree. If you had stuck to that point and didn’t put a bunch of nonsense in your article, you would’ve made a lot of sense. As it was, you impugned yourself to all of the shareholders who really follow the company. I’m sure you’re tired of hearing from us, but we really do know more about the company than you do and so we feel we must defend Globetel from what are obviously baseless accusations.

Regards,
XXXX XXXXXXXX

<hr>

I know many here don't like that I even responded to it, but some were wondering why no one rebutted the article. So there it is. I also copied Bill Mann on the email, who is senior editor for investing at Motley Fool.


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