First Coffee for 1June 2006: GlobeTel's Russian Partner Speaks, NetSuite At Purdue, IKEA Wants CRM Help in Britain

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David Sims
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First Coffee for 1June 2006: GlobeTel's Russian Partner Speaks, NetSuite At Purdue, IKEA Wants CRM Help in Britain

By David Sims

The news as of the first coffee this morning, and the music is Social Distortion’s “Ball And Chain:”

The Russian business journal Vedomosti has recently reported that shareholders of Russia’s Internafta said U.S. telecommunications equipment producer GlobeTel “was responsible for the failure” to implement a $600 million project to build a WiMAX network in Russia.

The agreement between the two companies to build the network was signed on December 29, 2005, and cancelled by GlobeTel on May 1. GlobeTel has said the reason they cancelled the deal was that Internafta never provided the promised financing.

Yet Vadim Tataurov, who owned a 25% stake in Russia’s Internafta, a company established specifically for the project, and Sergei Zhukov, another Internafta shareholder with a 25% stake, said that GlobeTel lost interest in the project after the agreement was signed.

Tataurov told Vedomosti that GlobeTel’s CEO Timothy Huff was “in a rush” to close the deal by the end of the year “to make (GlobeTel’s) shareholders happy.” Internafta made the first payment but at a later date, Tataurov claimed, adding that GlobeTel’s managers asked them to buy GlobeTel shares before signing the contract.

No independent verification of Tataurov or Zhukov’s claims was given. A source in GlobeTel Wireless Europe has denied all the accusations.

Following the cancellation of the agreement, in early May lawyers at Sarraf Gentile filed a lawsuit on behalf of GlobeTel’s shareholders against the U.S. company and some of its top managers with a court in the U.S. state of Florida.

GlobeTel stock shot up 75 percent in a single day in late December 2005 after the firm, which describes itself as a “diversified, global telecommunications and financial services company” announced the $600 million Wi-MAX wireless network deal for the 30 largest Russian cities, a claim that raised skeptical eyebrows among knowledgeable observers.

Huff promised GlobeTel would have $150 million of the financing in place by January 31. That deadline came and went, GlobeTel announced that it had extended by 30 days the payment deadline for their Russian partners, LLC Internafta, to pay up.

No payments were made, so GlobeTel upped the promise to $300 million, but in April, according to Interfax, GlobeTel “postponed the launch” to May. Interfax cites a source close to the company as saying the cause of the delay was that GlobeTel’s Russian partner, Internafta, didn’t provide the money promised.

Vedomosti reports that some Russian market observers have speculated that Internafta’s owners might have set up the company to obtain a developed business plan from GlobeTel for the WiMAX project, without having any intention to cooperate with the U.S. company.

First Coffee isn’t sure which interpretation GlobeTel officials themselves might prefer – the possibility that they might have never particularly cared if the project came to fruition, as their hand-picked Russian partners seem to allege, and were merely interested in pumping their stock, or the possibility that they were suckered for so long by a company that never intended to cooperate beyond swindling them for a business plan.

It comes down to one of two choices: Either GlobeTel was genuinely – and badly – fooled by their carefully-selected Russian partners, and GlobeTel management led stockholders on a wild golden goose chase following a trail of bread crumb promises in Russian circles for months, or they were never serious about the project from the word go, and were the ones scattering the bread crumb promises – $150 million soon! Good faith! Extended deadline! $300 million any day now! Strong assurances! April – no, May for sure! – themselves.

Either way the share price tanked, and friends, if you get rolled in a dark Russian alley do you really care whether your Intourist guide was lost or not?

Neither explanation for what happened to GlobeTel in Russia inspires much faith in the company. You could say they were simply in way, way over their head in Russia to begin with, that was the opinion of a seasoned Russian telecom hand First Coffee heard from, and if that’s the case then, well, pilgrim, cast a colder eye on any other grandiose-sounding plans they float… or don’t.

New York Post financial columnist Christopher Byron is calling for the American Stock Exchange to “halt trading in the shares of GlobeTel, and if the bosses there won’t, then the National Association of Securities Dealers has to do it for them. And if the NASD won’t act, then the Securities and Exchange Commission has to do the deed.”

Byron lambastes GlobeTel as a “ridiculous hologram of a company” foisting off “two complete pump-and-dump cycles that have sent an astounding 1.1 billion shares of its stock churning through the market,” resulting in “a bogus $350 million market value for the company, two-thirds of which has now evaporated, with $74 million of it detouring into the outstretched hands of the company’s insiders.”

First Coffee wouldn’t go quite as far as calling for regulatory action, believing that the real wonder in how a fool and his money ever got together in the first place. But still, bottom line: However GlobeTel ended up Stoli Creek without a shot glass, either they knew what they were doing or they didn’t. And neither option is too appetizing.

NetSuite, Inc., a vendor of on-demand CRM, has announced that Purdue University, which bills itself as “one of the top two schools in the U.S. for industrial distribution,”  has become the first institute of higher education to incorporate NetSuite into undergraduate and graduate curriculum for the Purdue Industrial Distribution Program.

The other of the top two schools isn’t identified, but First Coffee suspects it’s never produced a quarterback as good as Drew Brees.

Several classes will eventually benefit from the program, NetSuite officials say, including: Financial Transactions in Distribution; Purchasing, Inventory and Warehouse Management; and Industrial Sales and Sales Management, among others.

As part of the Industrial Distribution Program (designed to “prepare students with the skills needed to serve the $4 trillion industrial distribution industry,” according to Purdue information) NetSuite is used in a real-life warehouse setting called the Supply Chain Technology Management Laboratory, where students gain hands-on experience using NetSuite for distributor management, customer relationship management (CRM) and Ecommerce.

Thus far, Purdue University has completed one year of graduate level work and some introductions into the undergraduate curriculum for the Industrial Distribution Program using NetSuite in the Supply Chain Technology Management Laboratory. 

In addition to distributor management, CRM and Ecommerce, students learn the fundamental functionality needed to run a wholesale/distribution business, such as advanced inventory management, order fulfillment, profit management, demand-based inventory replenishment, supply chain management, logistics and purchasing, marketing, industrial sales management, and human resource management. 

The Industrial Distribution faculty will be now incorporating NetSuite into almost every class offered that is related to distribution, both undergraduate and graduate.

Brand Republic is reporting that Ikea is looking to appoint a direct marketing agency to bolster its customer relationship management through a series of direct mail and online initiatives.

The Swedish DIY chain has taken a number of steps to improve its CRM in the UK, and the agency's brief “will include creating direct mail, online and email communications. It is believed that the activity will build on the loyalty scheme and other initiatives developed by Ikea over the past year,” Brand Republic says.

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Feedback for First Coffee for 1June 2006: GlobeTel's Russian Partner Speaks, NetSuite At Purdue, IKEA Wants CRM Help in Britain


Great timing for your article. I know you haven't had the time to review todays report from GTE Huff, although for some reason you still have the precious resource to be a Chris Byronish basher of this company. Get a life.

Do you guys actually research your articles, or just make them up? Among your inaccuracies "No payments were made, so GlobeTel upped the promise to $300 million"
This "upping" was reportedly offered by Maxim Chernizov, in an interview with Maxwell Murphy, Dow Jones Newswires columnist. It wasn't "promised" by Globetel, as you casually mention.

I'm sure your wording was just "license", but inaccurate, just the same.

Maybe you had too much coffee.

Hi John,

Did GlobeTel CEO Tim Huff accept Charnizov's $300 million promise and use it to keep GlobeTel in the deal? I think if you'd do more than just make up excuses for Huff's failures you'd find that he did.

I'm sure your attempt to deflect blame from Huff is just "blowing smoke," but misleading, just the same.

Maybe you have too much tied up in GlobeTel.

Hi Clubbeaux,

To tell you the truth, I don't know if Globetel CEO Tim Huff did or didn't accept the $300 million. It is of no concern to me.
That is not what I am debating here.

What I do know is the origin of the concept. The information was released in a DJ newswire article, as reported by Maxwell Murphy, from an interview with Maxim Chernizov. The information did NOT come from Globetel, as reported by David Sims in this piece.

Why report it if it isn't true, and can be easily verified? It is inaccurate and incorrect. Point Blank. No delfecting blame, no blowing smoke.

Live with it.

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