Goldstein again urges Warwick Valley Telephone to sell, lambastes board for failing to act

By Lisa Kerner

Charlotte, N.C., March 22 - Warwick Valley Telephone Co. investor Lawrence J. Goldstein, affiliated with Santa Monica Partners, LP, continued his scrutiny of the company with another letter to the board of directors on March 20, according to an amended schedule 13D filing with the Securities and Exchange Commission.

Goldstein believes the company should separate its actively operated telecom business from its passive investment portfolio investments to benefit shareholder value.

"However, our suggestions to accomplish a separation have to date always fallen on deaf ears and have been completely ignored by the board without so much as a single note of recognition," said in the letter.

Goldstein likened the board's current course, which seems to focus more on board resignations and replacements, to "rearranging the deck chairs on the Titanic."

"An immediate sale, especially of the telecom business, clearly is in the best interest of Warwick's entire set of constituencies; shareholders, customers, and employees alike," Goldstein added.

According to Goldstein, Warwick Valley Telephone has stuck to its same "old ostrich-like methods and philosophy" by pouring millions of dollars into technologies in a vain effort to compete in video and Internet services in addition to telephone service.

"It is appears doubtful that even if there was [a] plan, and even if there was a management team, and even if the team was led by both G-d and Superman, that Warwick's operating telecom business could even be made to grow its revenues and profits," Goldstein said in the letter.

The investor suggested the company follow the example of Hector Communications Corp., which recognized the competitive threat it faced and put itself up for sale to the highest bidder for a gain of 160%.

Goldstein ended by stressing that the "time for a sale is now" and reminded the board that its "fiduciary responsibilities must be taken very seriously or you may position yourself to be accused of violating these very duties and responsibilities."

In his March 19 letter, Goldstein questioned the rationale of having Herb Gareiss remain a director of the company after Gareiss resigned as chief executive officer and president due to poor health.

Santa Monica Partners, LP beneficially owns 114,689 shares, or 2.1%, and Lawrence J. Goldstein owns 130,889 shares, or 2.4%, of the Warwick, N.Y., communication services company's stock.

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