Saturday, February 16, 2008

What Shareholders Can Do?

Now that we have started and established this exploratory group, the real work begins. I started this group because I wanted to harness the resources of the shareholder base in order to enact changes in the company and lead to maximing shareholder value.

I have received numerous emails from the members (both retail/institution) on what can be done and how they can help. Some have recently mentioned writing to Wu or Icahn. Some have suggested filing a lawsuit against the BOD. Some have suggested going to potential suitors now. Some are focused on the shorts. Some have suggested going to Merrill Lynch to explore strategic options for the company. Some have suggested to file a 13D to get better representation from serious investors. Some have suggested to just wait and see the results of the upcoming quarters. Outside the group, other shareholders are reluctant to join because they feel that selling out at this stage is a tremendous waste and loss of opportunity in a unique franchise/position.

Over the last week, there has been a common theme that it is now a wait and see attitude. Wait for the results and then have the shareholder meeting with management. However, there is a lot of work that needs to be done. While I appreciate the suggestions above, the stated goal of this group for now is to work with management (plan A) and "encourage" them to do their jobs in turning the company around, defend the stock price, and enable the company to be in position to reap the benefits of the growths in their products/markets.

What can we do now? In my letter to management and to other institutions, I have listed down the issues that need to be resolved such as compensation, bloated expense, defense of the stock price, resolution of the CB, debt/captial management, monetization of assets/cash flow, board accountability, etc. As I have stated in the past, I am a retail shareholder with limited resources (I have a day job and just this week had to consult on another project). The large institutions as well have other stocks to follow and may only have one or two financial analysts/portfolio managers. So, this is really the time to tap into our resource base (all shareholders that are frustrated and want change). We need you to research information on the issues I noted above or that you are concerned with. We cannot go in the shareholder meeting unprepared like we were last November when it was an un-organized group of shareholders. For ex. compensation, this has been discussed in the past. We need concrete examples of other executive compensations (similar situations, etc). Share buyback- how much. Expense ratios/cuts - how much. If you are concerned with the building situation in China, do some legwork and research what can be done (how much is it worth, what options to get financing, etc). If you want to involve a particular organization, contact them or have them contact me. You can pour over the company SEC filings and look for inefficiencies. If you want to change the makeup of the board, do some research - get the legal issues/procedures, dates.

Send me this information and I can collate it for the group. Just like the shareholder meeting, I set out the agenda, selected the speakers etc but not everyone is going to be happy with it, specially if you don't give me input.

Finally, we have gained good momentum (35 participants in the shareholder meeting and 150 downloads of the call in the following couple of days) but the group's level of success going forward will directly be correlated to the level of interest and effort by the members. We have an incredible opportunity to enact change and release tremendous value but only if we act. I will continue to push for more support and go through the core issues that management/BOD has to resolve. Again, it will be more effective the more information/research we have. So, send me articles, quotes, facts, linkes, examples, etc.

Once the company releases the date of the earnings call, I will email Peter Blackmore to follow up with the shareholder meeting.

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