Second Cup of Coffee for 24 February, 2006

David Sims : First Coffee
David Sims
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Second Cup of Coffee for 24 February, 2006

By David Sims

david@firstcoffee.biz

A second cup of coffee this morning, and the music is “Is You Is Or Is You Ain’t My Baby?” to the delight of my colleague Michelle Pasquerello here at TMC, one of the enlightened individuals who appreciates Louis Jordan’s genius:

Amazingly, it seems the tinfoil-lined baseball hat brigade has decided to stop hassling me about my GlobeTel coverage (“Why are you criticizing this company I’ve invested in? Who are you really working for? Send me your biography.” I swear I’m not making this up), and, I don’t know, go protest global warming for interfering with their Studebaker stock or something.

As a result, I’m getting intelligent comments from people with money invested in the company, as opposed to stupid comments from morons with money invested in the company.

Some of them write a lot about what technology they claim GlobeTel has, or the great plans GlobeTel has, and while it’s interesting, I don’t have the expertise, time or inclination to verify if what these people say is true or not, my interest in GlobeTel is in their audacious $600 million Russian Wi-MAX bid, since that’s the market I cover, I’m not a stock analyst or company analyst, I report on interesting things happening with wireless.

But these folks, who in most cases do have a financial interest in the company, remember, seem to be a distinctly more literate and informed breed than the first onslaught I got when I dared criticize some pennystocker’s baby, so I offer them, unvouched for and uncorroborated, nothing herein should be construed as an offer or buy or sell securities, act before midnight tonight, batteries not included, these are trained professionals, don’t try this at home:

“As a GlobeTel shareholder. I wanted to say that I enjoyed your article today. All that is ever asked for is some balance. And real investigative journalism.

“One other thing. If you could get Cleary Gottlieb Steen & Hamilton LLP, to confirm they are the law firm handling the transaction, I believe that would go greatly to confirming there is a real and serious deal here. I have not been able to get a response from them. I hope you can.

“I do like the fact that you folks are holding Mr. Huff’s feet to the fire. But only when you present the whole picture as you did today.”

A bit later, from the same guy:

“Here is some more ammo about Cleary, Gottlieb. They have a web page that shows recent assignments. GlobeTel is not on this page. It would seem that if they are willing to post this information that we should be able to find out about GlobeTel:

http://www.cgsh.com/english/news/news.aspx

“Happy hunting. Here’s hoping I don’t need a life preserver.”

Another one:

“My personal feelings is Huff is getting his ducks all lined up for the move to the NASDAQ. The SP has to move a bit north of $4, though, before compliance is met, but, if all his divisions fire on all cylinders, he does have a winner.

“On a more personal observation, I see you are reporting from a base in Istanbul. I spent a few years roaming that area back in the late 60’s while stationed in Karamursel, just a ferry and hair-raising taxi trek on the other side of the Marmara Sea.

“The Golden Horn was intoxicating, under a more relaxed political climate, and the women as dark and intriguing as the chi.

“Blend in and don’t look nervous *Last words to Billy Hayes as he left the pudding shop across from the Blue Mosque* (We both rented rooms there).

“*Laughing*”

Another one:

I am a very middle of the road type, not willing to bet away my earnings, but I have followed the GlobeTel story for a few years. This is by far the most interesting time for this company. Irons in the fire at GlobeTel include high-altitude airship testing scheduled this month and sky-dragon airship demos as seen on the GlobeTel website, as well roll-outs of Gcash debit card transactions, margins from switched telephony, combined offering with 2 developers and manufacturers for VOIP equipment GlobeTelX, StrateVoip POS platforms, and of course the potential HotZone Wireless WiMax deals in Russia and Germany.

“I just wanted to write and let you know that before the Press Release of GlobeTel of the Russian Deal in December 05 – I have been very happy with the company’s progress. I do not claim to be overjoyed with extended timelines, but I communicate regularly with several GlobeTel investors and we all agree that in the last 4 years – the company has made excellent progress…

“You do know that Tim Huff has put his reputation on the line? He believes this company will be profitable sales and marketing company and we will see this in the results by the end of year, or else he will step down. I think these details are important to not overlook – and your readers deserve the complete story.

“I just wanted to say again, that I enjoyed your article. I found it a good read and I think you have a very neutral tone which is what GlobeTel deserves – but that is in my opinion.”

Another one:

“Unfortunately, it seems that you guys have not done your research. In Germany, Uli Altvater is considered one of the pioneers in Wireless Metropolitan Area Networks. To understand why GlobeTel has major contracts in play in China (China Railcom), Russia, Japan, Germany, Mexico and other Latin American nations, you need to understand what GlobeTel brings to the table.

“The offering that GlobeTel has is a ruggedized outdoor basestation that can operate in extreme weather conditions, ala Russia and the statosphere. Although broadband internet connectivity is obviously part of their offering (80MB/S per basestation), the real prifts will come through the DECT phone service, which allows any Digitally Enhanced Cordless Telephone to be able to connect within the network and also use VoIP to allow international calling.

“As the biggest cost in network deployment is the CPE cost, DECT phones (with messaging) can be bought for around $20 and many people in Europe already have them in their homes.

“Further, GlobeTel also has a unique solution that allows for IPTV based on the DVB-RCT standard. The final kicker is that GlobeTel is developing a High Altitude Rigid Airship Platform that the Russians very much want to be a part of. Near Space technology has almost unlimited applications, especially over rural areas and for use in Homeland Security, Military, Pipeline Monitoring, etc….

“It seems apparent to me that Mr. Meyer, who speaks fluent Russian, was brought on to help finalize this deal and with this now in hand, he will find someone who does not have other commitments…

“Having seen first hand the rugged zip drives that the US Army uses to transfer map files, I have no doubt that Near Space Airships will be a requirement to protect not only our borders, but also our military. Such airships can also be used to efficiently search for and image areas using ground penetrating radar to find oil or rare earth metalssuch as platinum, palladium and gold, which also are prevalent in Russia.

“Of course it comes down to execution and GlobeTel needs to execute. If you had bothered to talk to Mr. Altvater, you would understand how he blew away the Russians and walked in and quickly enabled DECT phones inside the DUMA, along with wireless broadband and media. The man spent many years at IBM and many years designing communication systems for the German military. His WMAN and WMAN II systems are still operating around the globe, as Germans build quality products that are designed to last.”

Another one:

“I will disclose that my biggest pet peeve with the GlobeTel management right now is their lack of disclosure and secrets. In your article, Nigel said it is somewhat normal to harbor a few secrets. I believe that to be true. The problem with GlobeTel is that it seems – in pure Tom Clancy style – the operations are ‘black bag’ secrets and shareholders are left in the dark.

“The SEC filings are very clear in the operations to date, but it has not been profitable so there is no credibility. As a shareholder, I would like more than LOI, but I am a patient person looking to score on the long side (and trade some in the short term…) So, we (collective shareholders) are left wondering and hoping that Huff is a man of his word.

“On Huff… in his defense, he has been very clear with shareholders and available in the past years with open letters to shareholders. He would address questions one-by-one in the older days, and was working his ‘3 year plan,’ (which btw is now in its 4th year). It has only been since NASA, and the subsequent change from OTC to AMEX, that things really started to get quiet.”

Another one:

“Go to Cisco or Lucent’s web page and try to find a WiMax product. You can’t do it. None of the big boys are ready to roll out WiMax yet. As I said, the only big U.S. company to try is Verizon. Why haven’t they tried to penetrate the Russian market? Maybe they think they’ve got better things to do.

“So the question that Seth [Jayson] keeps asking and you keep repeating, ‘why haven’t the big boys done it?,’ is easily answered. They’re not ready to release here, much less there. So would it surprise me that Russian investors are interested in the product? No. Are there an abundance of alternatives if you want to be one of the first to offer WiMax in Russia? No, there really aren’t. Yes, there are some, but not a lot to choose from. If the product is what they say it is, I think the Russian investors are buying pretty cutting edge technology.

“Do I think GlobeTel really has a deal and they’re really going to get $600 million? Dunno. I’m waiting and watching like everybody else. Do I think GlobeTel can really execute on a signed deal? Probably not. I’d be shocked if service and support were adequate once they get a network up, but Russians are accustomed to bad service, right?”

‘Nother one:

“Funny, Robert Earl Keen graces your morning while the haunting lyrics of Dusty Springfield’s ‘Son of a Preacher Man’ seem to greet me every time I check on my investment in GlobeTel.

“‘How it Looks From Russia’ is a fair and objective piece with just enough of a tickler in the closing to make any long wear a sly smile.

“The only time I cringe is when the name ‘Seth’ appears. *GlobeTel longs have taken to wearing garlands of garlic and have been seen brandishing crosses whenever his name surfaces* After all, the rumors abound that Mr. Jayson shares ‘Underoos’ with the hedge funds that are influencing GlobeTel’s sp.

“I thank you for the advance notice of your writing and I look forward to the next installment when Sanswire ll *no blimp ‘ala Seth’ puns here* takes off into the stratosphere, or, *GULP* plunges into the ocean next week.

“The Russian funds will provide the fuel while the flight of the Stratellite™ will make believers of all. *Putting on my best Elmer Gantry face*

“…..all while the haunting strains of Dusty run rampant through my head…..”

And another:

“GlobeTel was buying the equipment from HotZone Wireless, so they were getting it on the ‘open market,’ but they purchased HotZone around the middle of last year, IIRC, so now GlobeTel is manufacturing the hardware themselves. WiMax hardware is hardly a commodity product at this point. The first certifications to the standard just occurred last month (no GlobeTel’s equipment has not been certified to the standard yet, but they do claim that if adjustments need to be made their product is readily upgradeable).

“So, while you can probably buy WiMax hardware on the open market, it’s hardly readily available. GlobeTel’s product is the only one I’ve heard of that incorporates Dect phone capabilities. Whether or not that’s really valuable is a matter for debate.

“My point is that the statement you keep referring to actually shows some technical ignorance on your part. No, it is not a simple thing to go buy millions of dollars of Wimax equipment from another vendor to go install and support in Russia. Vendors at this stage are not ready to put Wimax equipment on the shelf at your local Best Buy. All of the big names are still developing and testing. The only major company that I know of to try to release a version of pre-Wimax is Verizon and they’re not selling their equipment to the competition, no matter how small.”

And:

“It really is an interesting story to watch, and an interesting study on how people invest. Not on real facts, but on reading the hype on the message boards.”

Caveat emptor, sports fans.

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