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Sorrento Rides a Gilded Wave

Light Reading
News Analysis
Light Reading
1/23/2001

Is the Sorrento ride over, or is it just beginning?

Once again, Sorrento Networks Corp.'s (Nasdaq: FIBR) investors are asking themselves that very question. Sorrento has enjoyed a string of positive announcements lately, and its stock price has reflected the fact that investors are expecting great things.

Tuesday, in fact, was another banner day for Sorrento's stock, which moved on no news whatsoever. Shares of Sorrento rose 3.13 to 28.5, a gain of more than 12 percent.

The rise could be attributed to a recovery in the markets in general, but it may also be due to a recent mention in the Gilder Technology Report, the technology newletter published by George Gilder. Under the subheading, “Stealthy Sorrento,” the report, published last Thursday, noted that the underlying technology powering Sorrento’s all-optical switch -- be it MEMs, bubbles, liquid crystals -- is still unknown.

The report also said that Sorrento CEO Xin Cheng exhibits “David Huber-like stealthiness,” which may or may not be a compliment. The point here is that even the most brief of mentions from Gilder’s report has the tendency to move stock prices, and Sorrento was no exception.

Sorrento started the year off with a bang by naming a new CFO and publicizing a patent that was granted back in November along with 20 additional pending patents (see Sorrento Names CFO).

Next, only one day before Osicom's annual shareholder's meeting, Sorrento announced it expects to report fourth quarter revenues for fiscal 2001 of around $10.6 million (see Osicom Projects 50% Sorrento Growth).

Then, Sorrento shares rallied as Osicom shareholders voted to complete the combination of Sorrento and Osicom and increase the number of the new firm's authorized shares to 150 million. This makes the company more attractive to potential suitors and potential recruits.

In the past week, shares of Sorrento have risen from around 20 to as high as 26.38. And, though Osicom’s market capitalization was less than $150 million in the final days of the year 2000, Sorrento’s market cap is now just north of $320 million.

Sorrento, of course, still remains one of the most hard-to-read companies in the sector (see Sorrento (FIBR) (formerly Osicom)). The shares have traded to a 52-week high of 145.11 and as low as 10.00 during that same period (see http://www.lightreading.com

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B
B
12/4/2012 | 8:59:39 PM
re: Sorrento Rides a Gilded Wave
Strange first sentence " Is the Sorrento ride over, or is it just beginning?"

Oherwise, looks good. I believe the ride is just beginning.

B
fiberocity
fiberocity
12/4/2012 | 8:59:39 PM
re: Sorrento Rides a Gilded Wave
Phil:

The marketcap numbers in your report appear to be low. Based on the proxy on December 12th, there will be a minimal 16,666,667 shares outstand after the Annual Meeting measures were approved plus stock for Sorrento conversion. This would result in a minimal marketcap of $467 million based on today's price and 30% dilution.

Still hard to understand why Lightreading.com recommended the stock based on the premise that 'suckers cheap' when Lightreading.com has been so critical of Osicom and their consistent disappointment year after year. Do you know why it took so long for them to release the news on the patent which was received on November 21st, 2000? It was in a press release on January 11th, 2001.

Lastly, was Gilder paid a fee and does he have any position in Osicom Technologies at this time? It does not appear to be his typical recommendation with Osicom's questionable past. Do you know Par Chadhas whereabouts and is he in retirement as he has no more formal ties to Osicom, correct?
dubbingjustin
dubbingjustin
12/4/2012 | 8:59:16 PM
re: Sorrento Rides a Gilded Wave
And, unpredictable management, always make this stock a roller blade...looks at the insider trading information...investors need to be 100% alert if you are trading this one, or you on their fork...
kingkong
kingkong
12/4/2012 | 8:57:50 PM
re: Sorrento Rides a Gilded Wave
fiberocity..you seem to be really against Sorrento..seems like you didn;t get a job and missed on the boat...too bad..Sorrento is the best metro DWDM....with products shipping..and unlike ONI..doesn;t have the buyer as thier board member..talk about ethics now...
fiberocity
fiberocity
12/4/2012 | 8:57:50 PM
re: Sorrento Rides a Gilded Wave
GILDER MISSED THE BOAT ON THIS ONE COMPLETELY!

Managers & Managing: Investors Sue Xcelera.Com Chairman, Charging Fraud in Mirror Image Deal
By Robert Tomsho
Staff Reporter

12/05/2000
The Wall Street Journal Europe


28
(Copyright (c) 2000, Dow Jones & Company, Inc.)



Investors accused Alexander Vik, chairman and chief executive of Xcelera.com Inc., of fraud in civil lawsuits, alleging that he misappropriated funds and manipulated stock offerings to gain control of Mirror Image Internet Inc., Xcelera's primary operating asset.
Xcelera, an offshore company with less than $3 million (3.4 million euros) in annual revenue, was once a Wall Street highflier. Its stock has tumbled since March, when it traded as high as $112.50 a share, after adjusting for stock splits. At that price, Xcelera had a market value of nearly $6 billion. The stock was hit hard by concerns about insider sales, mounting shareholder litigation and the potential tax consequences of certain transactions.


In early composite trading Monday on the American Stock Exchange, Xcelera was up 8%, or 50 cents, to $6.75 a share, after rising 24% Friday. Based on the early Monday price, the company had a market capitalization of about $722.3 million, with 107 million shares outstanding.
Based in the Cayman Islands, Xcelera previously was known as Scandinavia Co. and until 1999 its primary business was a resort hotel in the Canary Islands.

Xcelera, of Huntington, New York, now owns a 74% stake in Mirror Image Internet, a Woburn, Massachusetts, concern that offers speedier access to Web sites. Touted by the likes of technology guru George Gilder, Mirror Image's technology has attracted investment from Palo Alto, California, computer hardware concern Hewlett-Packard Co. and Exodus Communications Inc., a Santa Clara, California, Web-hosting concern. This year, Exodus paid $637.5 million in cash and stock for a 15% stake in Mirror Image, which isn't publicly traded.

If Xcelera's technology has been well received, its operating tactics have at times confused investors. After disclosing that the Exodus transaction might create a tax liability for shareholders because of Xcelera's offshore status, the company said it would pay a special dividend to placate investors. Xcelera's stock rebounded in July when it announced a two million share buyback program, but stumbled a week later when VBI Corp. -- an entity controlled by the Vik family -- filed to sell one million shares, a move that was subsequently rescinded.

A Nov. 15 lawsuit alleges that Mr. Vik and VBI defrauded two Swedish investment concerns related to Kerstin and Tryggwe Karlsten, a Swedish couple who say they were friends of the Vik family and had invested with Mr. Vik in the past.

The lawsuit, filed by the Karlsten concerns in U.S. District Court in New York City, alleges that in 1999, the concerns sent $3.2 million to Mr. Vik and VBI with the understanding that they would use the money to purchase a 50% stake in Mirror Image for the Karlstens. Instead, the suit alleges that Mr. Vik and VBI used the funds to purchase shares for entities that they, not the couple, controlled.

By voting those shares, Mr. Vik and VBI subsequently caused more shares to be issued in Mirror Image and expanded their control over the company, according to the lawsuit, which seeks more than $250 million in damages.

Mr. Vik, who lives in Greenwich, Connecticut, referred questions to a spokesman for VBI, who described the allegations as "frivolous, completely unfounded and utterly meritless."

A second lawsuit, filed in a state court in Wilmington, Delaware, names Mirror Image, Xcelera, Mr. Vik and his brother Gustav, also an Xcelera executive, as defendants. It seeks $450 million in damages and was filed on behalf of various investors in Sweden, Panama and the U.K. who invested more than $10 million in Mirror Image in the mid-1990s, when it was a struggling Swedish start-up.

The second suit alleges that, while shifting the company's operations to the U.S., the defendants conspired to fraudulently dilute the plaintiffs' stakes.

The suit contends that they did so by denying the plaintiffs material information and barring them from taking part in various private offerings, even as the Viks were increasing their own holdings by acquiring newly issued shares in private offerings at what the suit claims were undervalued prices.

An Xcelera spokesman said that the allegations in the second suit are "completely without merit" and "a regurgitation of an arbitration claim that was filed earlier this year in Sweden."


fiberocity
fiberocity
12/4/2012 | 8:57:50 PM
re: Sorrento Rides a Gilded Wave
Gilder has made his share of mistakes and should not be followed blindly in Sorrento. Look at this Xcelera (Symbol XLA) that he recommended in February 2000 and it ran to $86. Now $10 with an incredibly overvalued marketcap of $1 billion still and they are being sued for fraud. How did he miss this fraud? Same way he is missing the boat on Sorrento. They are in every Mob On Wall Street Article and always disappoint shareholders year after year. Nothing has changed with the new name change. Still the same old crap..
dubbingjustin
dubbingjustin
12/4/2012 | 8:56:51 PM
re: Sorrento Rides a Gilded Wave
Please..don't touting Sorrento's product is the best, please.. give me the award winning list of sorrento's gear, then you might be able to say Sorrento have the best metro gear..
Products shipping to low profile cable market doesn't make much sense, those are not as profitable as for telecom..how long does it take for Sorrento to be profitable? who knows..
FIBR(sorrento) surely have the buyer in their board member, if you are willing to check it out..
Yes, talk about ethics now...
dubbingjustin
dubbingjustin
12/4/2012 | 8:56:50 PM
re: Sorrento Rides a Gilded Wave
Not to Fiberoxxx. sorry for the typo.
Don't try to hype anything here, please take the ethics and talk about the TRUTH.
fiberocity
fiberocity
12/4/2012 | 8:56:47 PM
re: Sorrento Rides a Gilded Wave
Doesn't Chapman Company cover Osicom Technologies?

Frightening that we have no analysts and the one analyst we have is involved with this highly controversial company:

MasTec was and still is highly criticized for (and word on the street is they are under investigation by the SEC for this $33 million payout) an unusual $33 million payout in 1998 to executives of companies acquired by MasTec.. reason for the payout was the drop in the stock price after the acquisitions.. nice concept that should work in reverse also.. when the stock price goes up.. the acquirees should return stock for the excess value they received! MasTec was also just sued this week for some $6 million missing... read on...

Joe Gladue just issued this buy recommendation on MasTec before the public became aware of $6 million missing from MasTec:

MasTec Inc. Reiterated `Strong Buy' at The Chapman Company
By Sybil Carlson
Princeton, New Jersey, Jan. 31 (Bloomberg Data) -- MasTec Inc. (MTZ US) was reiterated ``strong buy'' by analyst Joseph Gladue at The Chapman Company. The 12-month target price is $42.00 per share.

If only Joe Gladue had known about this $6 MILLION MISSING, he could have held off on his reiteration and saved investors a few bucks.



Published Saturday, February 3, 2001, in the Miami Herald



Lawsuit: MasTec siphoned millions
BY JANE BUSSEY
[email protected]


A company that bought the former Spanish and Latin American business units of MasTec has alleged in a lawsuit that MasTec representatives illegally siphoned more than $6 million from the international company into MasTec accounts.

The lawsuit was filed Monday in Federal District Court in Miami by Artcom Technologies Corp., a Delaware holding company that controls Sintel S.A. and Sintel International, formerly the Spanish and Latin American operations of MasTec, a prominent Miami company that provides cable and fiber optic construction services for telecommunications and energy companies.

MasTec, a company founded by the late Cuban-American political leader Jorge Mas Canosa and now controlled by his family, dismissed the importance of the lawsuit.

``We have no comment except we will vigorously defend ourselves against this frivolous litigation,'' said a company statement.

The lawsuit charges that the fraudulent actions were carried out for MasTec by two company executives who were acting on behalf of the Miami company even after the December 1998 sale of Sintel in a management buyout. MasTec retained a 13 percent share after it sold Sintel to a management group.

The complaint alleges there were five fraudulent schemes.

In the largest, the two executives ordered $5 million transferred from the Puerto Rican subsidiary to the Mexican operations, then had $4.2 million transferred to the account of a Miami lawyer, the complaint alleges. At the same time, the lawyer sent a letter to the Mexican company informing them that the money would be transferred to MasTec. All $5 million, the suit charges, was due to the Spanish subsidiary, which has since been forced into bankruptcy.

Another $400,000 out of the $5 million was allegedly transferred to SuperCanal, a cable television company in Argentina where MasTec is a partner; $100,000 to a private citizen in Argentina; and $100,000 to the Mexican subsidiary's bank account in New York.

In another transaction the lawsuit charges was fraudulent, $1 million was transferred by Sintel to Sintel International and then the money was used to pay a debt to a British Virgin Island company called Woolcombe Limited. The offshore company sent an invoice on a sheet of paper without letterhead, invoice number or any other accounting methods, the lawsuit alleges.

``The scheme that MasTec fraudulently and furtively confected and executed ... was intended to deplete Artcom's resources unjustifiably and without any legitimate commercial purposes so as to unduly enrich Mastec,'' the lawsuit charged.

``We believe very firmly in the allegations and look forward to our day in court,'' said Pedro J. Martinez-Fraga, attorney for Artcom.
Frank
Frank
12/4/2012 | 8:56:43 PM
re: Sorrento Rides a Gilded Wave
I believe that it was last year when MasTec was named by Telergy as the prime contractor in a number of metro area fiber otpic route buildouts, using power company rights of way. In NY City alone the plan called for about 100 route miles to be placed. Global Crossing was in line to use their services when the buildouts were completed. Anyone know if this deal is still alive?
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