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%% Commodore Shareholder's Movement - Update %%
%% CSM and the CBM Sharholder's Meeting in Nassau %%
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March 2, 1994
Nassau, Bahamas - "We are not a rubber stamp board of directors,"
replied Commodore Chairman Irving Gould to an accusation by computer
dealer, Jeffrey Moscow.
By this time during the 1993/94 Annual Shareholder Meeting of
Commodore International, board members had been repeatedly questioned
on counts of inept management - for having led this NYSE issue to a
net loss of $356 million for FY93. Only two years earlier, Commodore
enjoyed annual net sales in excess of one billion dollars.
Shareholder equity is now about (negative) -10.78 per share and
Commodore owes over $50 million to banks in 18 different countries.
The banks are putting the pressure on Commodore to repay, and
Commodore is trying to avoid legal actions.
The meeting which was four months overdue was held this March 2nd in
its usual location, the exclusive Lyford Cay Club in Nassau, Bahamas
where Commodore holds its incorporation.
There was no repeat of the scene of November, 1991 when a dissenting
shareholder was physically ejected from the meeting, but passions were
nonetheless running high. At one point, Moscow asked General
Alexander Haig - one of Commodore's five directors - to encourage
Irving Gould to step down in the same way he had admirably done so
with a certain US President. Someone has to take control, insisted
Moscow; nothing is going to improve under current management, he went
on.
For about a half-hour, Gould, Moscow and shareholders parried comments
on Commodore's ailing situation and prospects for recovery.
Commodore is an international company which manufacturers the Amiga -
the most popular model home computer in Europe and the host to many
professional video products in the United States - for instance, the
Video Toaster which has revolutionized the video industry. Commodore
also recently introduced CD32, a 32-bit game machine which is becoming
a hit in Europe.
At the annual meeting, shareholders contended that perpetual mistakes,
including inadequate supply of products during consecutive Christmas
seasons, was responsible for the losses, while Commodore blamed the
effects of soft economic conditions in Europe, their largest market.
But whatever the cause of Commodore's problems, everyone at the
meeting agreed that something needed to be done - perhaps new
management or a grass-roots marketing campaign tapping into the
enthusiasm of the Commodore base of customers as suggested by Michael
Levin. Levin described himself as a spokesperson for these customers
- many of whom have and are still actively becoming shareholders. The
only thing being asked of Commodore was leadership.
The lack of confidence in management was demonstrated by the
shareholder defeat of a proposed amendment to Commodore's articles of
association. This amendment would eliminate shareholder checks
concerning large decisions such as mergers and sales of company
assets.
Another point raised at the meeting was Commodore's urgent need to
resolve its debt and recover credibility so that it can become a
player in the emerging interactive television market. In this market,
programs and software will be downloaded by service providers into
cable-box-like devices sitting on top of peoples' televisions.
Commodore, the shareholders insist, must become the supplier of the
boxes or the core technology going into compatible boxes supplied by
other manufacturers.
"On the surface, every one of our objectives was met for the meeting,"
stated Marc Rifkin, a shareholder attending the meeting with proof of
the thousands of customers and shareholders backing his cause. "We
don't think our warning fell on deaf ears; we now have an open line to
Irving Gould, and he seems willing to listen. That is the critical
first step."
What happens next? Rifkin replies that either Commodore starts taking
the steps necessary to survive, or they don't. The first sign will be
whether Commodore brings in someone who can deal with the daunting
financial and marketing challenges, as well as working with the Board
of Directors. Previous attempts to find such a turn-around artist
have ended in debacles, most notably, an ex-Pepsico executive, who
cost Commodore a $10 million lawsuit, and current president, Medhi Ali
who led Commodore during its recent decline.
Commodore Shareholder Movement Announcement, March 2, 1994
We were at the shareholder meeting, and we were not alone. Various
Amiga dealers whose livelihood depends on Commodore's success were
also in attendance. Some spoke along with us while others silently
observed the proceedings.
Our message was clear; things are not rosey. Consistent and basic
mistakes led Commodore to where it is, and as anyone can plainly see,
continuing these mistakes will lead to ruin. They must not miss their
one chance to make a comeback through the interactive television
market. This relies on partnerships which Commodore has seemed unable
to form. The situation is urgent. Commodore must leverage what
resources it still has, including the activities of those customers
who still carry the torch.
Irving Gould met with us after the meeting to discuss what might be
done. It seems that Gould is willing to listen and is concerned about
the message which is reaching the users. If there is a solution to
Commodore's situation, it must start from the top. We hope to offer
Gould a solution which he will find favorable and will best benefit
the interests of the Commodore shareholders and customers whom we
represent.
Keep your letters coming. Keep them concise and focus on what things
you might do to help. Most importantly, spread the word. The
assumption is that Commodore and its computers represent a tradition
worth keeping. We can not do this alone. Others must become active
leaders in the cause.
Commdore Shareholder Movement
P.O. Box 8296
Philadelphia, PA 19101
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