MMS2728

Towerstream Trading Below Cash

As a Rhode Islander who lives and works in the area where this company is based, much of the information I have of this company comes from locals and the relationships I have with Towerstream employees I have met in social arenas. As a casual investor I have always had my eye on Towerstream and for a long time heard a lot of good things about the company. But for the last year or so, I have heard much more negative feedback than positive.

Much of what I have heard as far as reporting false numbers relates to reporting the same revenue more then once or withholding revenue from a month in which they have already met their quota and reporting it as revenue for the following month to ensure that month's goal is met.

Whether this is "fudging" the numbers or just common business practice is something as a casual investor I am unsure about which is why I asked for your opinion. But whether this is common business practice there is much about this company that raises red flags to me.

For one, I have spoken to many Towerstream employees and now ex-employees and they all put the numbers of laid off employees closer to 60 and yet the company claimed in the Providence Journal that they had only made minor layoffs. Even if it were only 35, for a company their size, that would seem to me to be more than just minor layoffs which makes me question the validity of all of their statemnts. I have also heard from many past employees that have been laid off and had their unemployment disputed only to have it reinstated because Towerstream was unable to provide any evidence to support their claims, which makes me question their ethics. These employess have all told me that these accusations were completely without merit.

And with these new layoffs coming just months after Towerstream paid for several employees and management to go to a resort in Puerto Rico in a time when Rhode Island already has one of the highest unemployment rates in the country, it again makes me question their ethics as well as their managerial decisions.

And finally, for a company that claims to be doing so well and showing such astounding growth to be forced to layoff such a large number of employees makes me question how these number can be true.

I admit that I am only a casual investor and that rumors and hear-say should not be your basis for investing decisions, but as someone who has considered putting my hard earned money into a company like Towerstream, I have to give these things consideration. I don't know if these things are true which is why I would like your opinion on the matter. Thank you.


On Jun 13 03:26 PM Asif Suria wrote:

> I saw the filing about 35 employees getting laid off and also talked
> to an ex-employee yesterday.
>
> Since the second quarter has not yet ended and sales in first quarter
> of 2009 grew 64%, I am not sure where you are getting your 33% growth
> number from. In face for full year 2008, revenue grew 54% when compared
> to 2007.
>
> From my understanding, the growth has been driven by offering lower
> priced products such as the $500/month 5 MBPS product. I have been
> approached by Towerstream sales about this product in my role as
> the Director of IT for a small company and have seen companies switch
> to Towerstream within the last year.
>
> The allegation of false numbers is very serious and it would benefit
> everyone if you can back up these allegations with some details.

Towerstream Trading Below Cash

I heard in the news that Towerstream was forced to lay-off over half of it's employees yesterday and yet they still claim to be increasing revenue by 33%. In the Rhode Island area where this company is based, there have always been rumors of reporting false numbers and concealing their true financial position. Is this mass lay-off proof that the rumors are true and is this stock just a sinking ship?