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Author: laf74 Two stars, 250 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 111  
Subject: NTLRF Date: 3/26/2007 12:07 PM
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Netteller has been suspended for a few months now and I am wondering how you see this company now. I want to know if the two that have been arrested are let go with no charges and the stock price still opens lower, is this a good buy. I haven't followed the financials much and don't know what the company will be like without the U.S.
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Author: TMFOtter Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 23 of 111
Subject: Re: NTLRF Date: 3/26/2007 12:12 PM
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Netteller has been suspended for a few months now and I am wondering how you see this company now. I want to know if the two that have been arrested are let go with no charges and the stock price still opens lower, is this a good buy. I haven't followed the financials much and don't know what the company will be like without the U.S.

Our investment thesis for Neteller was predicated on its US business going to zero, so that much was expected.

The degree to which the US has elected to enforce some awfully questionable laws has taken us by surprise. One thing that has been brutal is the inability by the company to refund US-based accounts. It's happening, but very slowly.

Neteller is an extremely profitable company, but we are in wait and see mode in terms of the legislation, as the company attempts to stave off a lynch mob. I think that we'll see a minimum of a 40% haircut when it trades again, but beyond that we may find that it offers a pretty good opportunity. Handicapping legal actions is a tough business.

Bill Mann

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Author: drdrab Two stars, 250 posts Old School Fool Global Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 28 of 111
Subject: Re: NTLRF Date: 3/26/2007 12:20 PM
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If you haven't heard yet Neteller announced today it is suspending gambling transaction in Canada and Turkey also, starting in April.

drab

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Author: TMFOtter Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 30 of 111
Subject: Re: NTLRF Date: 3/26/2007 12:28 PM
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Had seen the announcement. I think that we'll probably see more of them, but it won't happen everywhere.

ONce again, that's why Neteller was a Wildcard company. Still, it's disappointing.

Bill Mann

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Author: TMFAgewone Big red star, 1000 posts Old School Fool CAPS All Star Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 46 of 111
Subject: Re: NTLRF Date: 3/26/2007 12:53 PM
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Netteller has been suspended for a few months now and I am wondering how you see this company now. I want to know if the two that have been arrested are let go with no charges and the stock price still opens lower, is this a good buy. I haven't followed the financials much and don't know what the company will be like without the U.S.

Laf74,

The net effect will be a company verging on unprofitable for the very immediate future. As Bill said, this doesn't worry us, and in fact, we expected it. Even sans U.S. biz, NTLRF possesses a highly scalable platform and very strong growth prospects given its pre-existing infrastracture, placing it in a strong position to service an ever-growing gambling populous.

The loss of Canadian business will also deal a blow, but I'm still inclined to think they'll keep on, and daresay, do well. The larger concern here are the legal ramifications, if any. At current, it doesn't seem that any meaningful financial consequence will befall Neteller the company. But there are a few pernicious statutes within the Patriot Act, and international law, which permit U.S. prosecution of Neteller. If this outcome were to manifest--the potential ramifications range from slap-on-the-wrist to disastrous. The worst-case scenario: Neteller is prosecuted, U.S. precedents a la Paypal are applied, and Neteller is forced to disgorge profits from its U.S. ops.

Thereafter, Neteller would likely cease to exist. I find this to be a remote possibility, as prosecution requires cooperation from foreign authorities. To be sure, Neteller facilitates online gambling in a very large way, which has very important knock-on effects when you look at tax revenue. So in fairness, it's hard to see the U.K.'s interest in playing ball here.

I'm not sure when these shares'll trade again, but I can unequivocally say they'll be much lower. Notwithstanding future legal developments and/or business model changes, I believe that risk-tolerant (read: very risk tolerant) investors will find themselves handsomely rewarded once 5-10 years have come to pass. Bear in mind though, this is an extremely risky proposition right now--it's not for the weak of heart and probably shouldn't occupy a large part of your portfolio. Bottom line: this company may appreciate 5x the price it opens at (when/if it does), but I'd also be prepared to lose whatever money you put there.

-Mike


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Author: rijo261 One star, 50 posts Old School Fool Global Fool Motley Fool One Everlasting Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 66 of 111
Subject: Re: NTLRF Date: 3/27/2007 10:38 AM
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Folks:

Please correct a misunderstanding here about the reality of Neteller's domicile. Neteller is not a UK company. It is a Manx company. It is quoted on the London exchange, but it is subject primarily to the laws of the Isle of Man, and by extension, the laws of the EEC.

The Manx government will cooperate with international financial restrictions designed to curtail the flow of drug money and terrorism money, but they do not care about puritanical restrictions on gambling, from the US or anywhere else. Douglas, the capital, has long had a casino, even during the years when gambling was illegal in the UK.

The Isle of Man is an independent country (it's the oldest democracy in the world) with a population of about 75,000 people and it does not like being shoved around. If the US continues its high-handed bullying, I would not be surprised to see this issue pursued through Brussels and through the international court at The Hague.

Just as an aside, the restaurant of choice there, as far as I am concerned, is The Garrison, a really nice tapas restaurant in Castletown.

Rijo

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Author: TMFAgewone Big red star, 1000 posts Old School Fool CAPS All Star Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 72 of 111
Subject: Re: NTLRF Date: 4/12/2007 3:56 PM
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Rijo,

Sorry for the delayed response, this board got buried amid the others and I didn't see your reply. Two points though, as it relates to the Isle of Man and Neteller:

--first, Neteller's charter as an e-money issuer was granted by the FSA, a U.K. governing entity, making Neteller's principal activities subject to U.K. purview.
--second, Isle of Man is a crown dependency. Loosely speaking--and I'm sure there's wiggle room, but on the broader scale--this means the U.K. has ultimate authority on legislative matters and acts as the Isle's representative in international forums.

Hence, it's hard to see much happening without U.K. involvement. Hope this helps!

-Mike

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