Thursday, April 17, 2008

Meeting with Directory Thomas Toy and Options going forward

I met with UTStarcom Chairman of the Boards Thomas Toy this evening in San Francisco. As many of you know, I have been nominated for a board seat by a fellow shareholder per company by-laws. As part of this process, I have had to fill out release forms for background checks and have six references available for the company hired executive search firm to interview and prepare a report/recommendation to the BOD. I had just submitted the last 3 references this last Monday and received a call from Mr. Toy a couple of days ago asking for a meeting. I was initially surprised because I had thought the process would still take some time.

We had the meeting this evening and to my disappointment (but not surprise), the board had already made its decision to discontinue my candidacy for lack of experience. I had a cordial discussion with Mr. Toy and he had wanted to personally speak to me about this rather than sending an email or announcing this over the phone. Mr. Toy mentioned that Bruce Ryan's board membership was just a coincidence (at about the same time) and had no relationship to my own candidacy. I discussed with Mr. Toy the frustrations/confusions of shareholders for the past few years and was willing to offer my help to send a signal to the street that there is a change and they would have a representative that will look after shareholder interests (of course, Mr. Toy mentioned that all the board members do that but you get my point).

Our meeting lasted about 30 minutes and did not reveal anything more than what was discussed in our previous shareholder meeting. Mr. Toy was gracious in offering to meet with shareholders in the future as we did last March 17 and mentioned that if the stock were to rise to $20 or $50, that would be something I could be proud of (I think he was being nice in offering a consolation for our efforts). As a final parting, he jokingly said that atleast I got a free bottle of water, which I replied to was actually a $300k bottle of water.

While I would have loved for the board to see the benefits of having me serve, how often does an outsider nominee get welcome on open arms. Moving on, what are our options?

Option 1 - Take consolation that we have done what we can at this juncture, continue to press our case, and move on.
Option 2 - Continue to seek the board, possibly cause some disruption but give shareholders a chance to be heard.

I would definitely like to pursue Option 2 but there will be more work and costs involved. There will be no guarantee of a win and the obstacles are high. It will send management a message regarding shareholder discontent but how much more can we show? Will it impact them in a positive way or just deter from the current turnaround? If we don't pursure it, will it show that the "group" has no "teeth". Would I be letting every shareholder out there that wants to continue this very meaningful fight down?

I dug up some information just tonight on SECURITY HOLDER DIRECTOR NOMINATIONS. Here is a link to the SEC website discussing this. I just quickly browsed through it and will go into it in more detail but it lays out the scenario we are definitely in and I think one that we can get maximum shareholder support. It would force the company to put me in the ballot atleast and give shareholders a "say".

I will discuss this matter with various shareholders in the next few days and decide on how to proceed. If you have any suggestions/comments or experience with this, please let me know.

In terms of achieving what the groups initial goals under Plan A, I believe we have accomplished a lot to this point. I don't believe we have support to go to a Plan B at this time as shareholders want to see how much the shareprice can appreciate once this management team executes and the iptv markets open up. However, if things continue as is and the stock continues to languish, then Plan B will always be an option and the support should continue to grow.

For me personally, its been a lot of peaks (mostly) and valleys (the stock price; not getting compensation cuts/etc). The peaks are the emails/calls I receive hearing how you have xxx amount of shares and in full support and have trust in my candidacy and all the earlier compliments for the blog, etc. It is truly an honor and a wonderful experience to represent the shareholders in front of management/board. I'd like to end this post (kind of getting sentimental) by saying thank you as well for all your support and encouragements.

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