Here is the Street.com story - pretty brutal if true.
Top Stories: Coyote's Mystery Sales
By Kevin Petrie
Staff Reporter
12/9/98 10:07 AM ET
Remember Diana Corp., the meat packer turned telecom
highflier whose stock hit 100 in 1996 and later tumbled off the
New York Stock Exchange? It's back from the dead, but its
biggest customer is MIA.
Diana's latest incarnation, Westlake Village, Calif.-based
telephone company Coyote Network (CYOE:Nasdaq), claims it
booked roughly 75% of its revenue last quarter, or $11 million,
from a company whose offices we can't find and whose
chairman we can't reach.
Just who exactly is Coyote? Look no
further than former Wall Street
phenomenon Diana. In its glory
days, Diana's stock raced from 12
1/2 in January to 100 in May 1996.
But as expected sales and earnings
failed to materialize, Diana's shares
crumbled to about 5 in early 1997
and the NYSE delisted the stock.
After Diana's pop fizzled, top management sold off the meat
operations and changed the company's name last year to
Coyote Network. Just this past November, Coyote rebounded to
list on Nasdaq after languishing on the over-the-counter Bulletin
Board for nearly two years. The stock has climbed as high as 16
3/4 from about 9 1/4 in the past month, which gives it a peak
market capitalization of about $161 million. For its latest quarter,
Coyote reported $15 million in net sales, up from a measly
$106,000 a year earlier, according to Coyote's 10-Q documents.
In its latest quarter, one company, Crescent Communications
Inc., provided almost 75% of revenue. Trouble is, TSC can't find
Crescent Communications, which Coyote claims is an
international telecom-services company, anywhere except on a
piece of paper in Carson City, Nev.
Crescent Communications has no listed address or phone
number, no active tax records in California and no business
license in Long Beach, Calif., where, according to Coyote,
Crescent is based. Coyote officials eventually provided a phone
number that they claimed belonged to Crescent
Communications, but that led only to a taped message at a
phone message service company in Southern California. TSC
repeatedly left messages for the company in the first week of
December. None have been returned.
Is this the case of "The Company Vanishes"?
In a Sept. 24 press release, Coyote boasted of its three-year,
$37 million pact with Crescent Communications. Coyote said in
the release it expected to ship $13 million in network switches
to Crescent Communications that month, and to deliver another
$15 million of gear by early 1999. Coyote execs say they booked
roughly $11 million of those sales in the quarter ended Sept. 30.
In fact, Coyote liked Crescent Communications so much that it
acquired 20% of it for $1.3 million, for $400,000 in cash and the
rest in the form of a discount on the equipment sold, according
to SEC filings.
According to the Coyote press release, Crescent
Communications Chairman Gene Curcio was looking "forward
to a rewarding relationship with Coyote."
It all sounds boringly routine, except that Curcio's Crescent
Communications has proved almost impossible for TSC to
locate. Crescent Communications is not listed in the seven
California area codes nearest its supposed headquarters in
Long Beach. No Crescent Communications is listed in the
Hoover's Online directory of U.S. businesses.
Long Beach city officials can find no business licenses for the
company in their databases. California tax officials have no
record of an active Crescent Communications Inc. (A news
clipping search reveals a Crescent Communications in Atlanta,
but that company is in public relations and has no links to
Coyote, Curcio or telecommunications equipment.)
We looked in Delaware, but came up empty. On a hunch, we
tried Nevada and hit paydirt. Well, sort of. Crescent
Communications Inc. was incorporated in Nevada in January
1997. According to documents filed with the Nevada secretary of
state, Eugene Curcio is Crescent Communications' president,
secretary, treasurer and director. The filing notes company
headquarters as: One World Trade Center, Long Beach, Calif.
Which is exactly where Coyote executives insist Crescent is
based.
A reporter from TheStreet.com drove to the 27-floor office
building at One World Trade Center to seek out Crescent
Communications.
No luck.
Crescent Communications is not listed on the computerized
directory in the octagonal marble-floored lobby. The name does
not ring any bells with the landlords, either. Officials with the
building manager, IDM Properties, have no recollection of
Crescent Communications. Leilua Anesi, operations and
leasing manager with American Office Centers, has never
heard of Crescent Communications. Her firm leases executive
suites on the eighth floor, where many small outfits lease space
month-to-month.
(Oddly, a different company called Crescent Technologies
operates on this hushed floor. Chief Administrative Officer Dana
Larson has never heard of Gene Curcio, his company or Coyote
Network. Larson says her venture, started in August, intends to
sell Internet services overseas -- a similar business plan as
that claimed for Crescent Communications.)
How about Eugene Curcio, Crescent Communications'
chairman? It is almost like trying to locate Godot. A telephone
listing search throughout California reveals an EB Curcio in
Irvine, Calif., but he identifies himself as a 72-year-old retiree
who has never heard of Crescent Communications. "You've got
the wrong Eugene Curcio," he says.
Coyote CEO James Fiedler is not much help in proving that
Crescent Communications exists. "I haven't physically been
there myself," he says.
That is rather odd since his company owns 20% of Crescent
Communications. "We've done a fair amount of due diligence"
on Crescent Communications, Fiedler says.
Under more probing, Fiedler did provide TSC with a telephone
number to contact Eugene Curcio at Crescent Communications.
That number turned out to be not for a Long Beach address but
one in Hermosa Beach, about 12 to 15 miles away. On the first
ring, a taped message is played: "Hello, you've reached
Crescent Communications. We're sorry, all of our
representatives are currently busy. Please leave a message
with your name and phone number and we will get back to you
as soon as we can. Thank you." TSC left numerous messages,
but no one from Crescent Communications called back.
That phone number is held by a telephone message service
company called South Bay Communications. Citing company
policy, manager Patricia Rhynsburger declined to say whether
South Bay does business with Crescent Communications or
Gene Curcio.
When presented TSC's findings, Coyote officials promised to
get back very soon.
So far, the silence is deafening.
|
