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Strategies & Market Trends : Value Investing

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To: Paul Senior who wrote (25512)	1/6/2007 4:45:01 AM
From: Madharry	of 78702

re: pegasus wireless. Unfortunately, I was indisposed at the time of this posting but when I saw that the market cap was low yet officer compensation seemed relatively high I reviewed the 12/15/ 06 proxy. I can see why this company chose to delist. The company could be a poster child of the type investors should be wary of. The first warning sign though was very easy to spot- 2 separate classes of voting shares. one for management and insiders the others for investors. Then there was the preferred share offering now a liability of $257MM or so. BTW AIG bought a chunk of the preferred and subsequently sued the company and i believe there was a settlement. It seems that that the company stated that it was an exclusive distributor of Direct TV in several areas but didnt mention that Direct TV could terminate the agreement pretty quickly. Oops! After a sharp decline in the stock price mgmt repriced their options in 2005. I expect they might be repricing them again in 2007. I laughed out loud upon reading that one of the reasons the company gave for delisting was that it was unlikely that they could sell more shares to the public anytime soon.

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