Warwick Valley Telephone Company (NDAQ:WWVY) shares moved down $0.90, or 0.53%, to $17.05 today after Santa Monica Partners LP disclosed a 2.4% stake in the company. The fund also voiced concerns that the company was falling behind in technology and suggested that it immediately put itself up for sale. According to the letter:

New initiatives are only giving WVT false hope. But we are dead.  However, fortunately, with nearly $10 million in net cash on the last published balance sheet, we are not broke. Technology has passed us by, done us in, and now overpowered us. We are too small to fight the likes of low-cost software based phone service competitors like Skype.  We are too small to be economic vs. the giant cable and telecom companies. We are spending on hardware and unnecessary and fast becoming old wire line technology. We can't win no matter how much good cash from our hugely profitable OCP we throw at the POTS.

You should realize I am not your best friend. I am your only friend.  We need to sell while we still have something to sell.  Investors became stockholders to make money.  Take the money and give it to shareholders in order that they may invest it somewhere else.  Only then will shareholders have a chance to make money. Let's be honest and realistic, neither you, nor the now resigned management, nor the present interim hires, have any answers to these questions and clearly you are all well aware of this.

The company should be sold or possibly split up, and the POTS sold, and now. Give my suggestions a real and immediate hearing and consideration and implement one or more of them immediately or propose a better alternative right now, immediately. The bottom line is that WVT's intrinsic value is much greater than its $84 million enterprise value. The questions is, are you ready to act to bring out this value now or not?

Clearly the company is troubled in a business that is quickly being outpaced with new technologies like Skype along with larger suppliers edging them out with economies of scale. The company still has $10 million in net cash and generates a positive cash flow, which would make it attractive to potential acquirers. Whether or not a sale takes place though depends on management's response to these suggestions. Regardless, this is definitely a stock to keep an eye on!

Related Companies
Verizon Communications Inc. (VZ)
Sprint Nextel Corporation (S)
Citizens Communications (CZN)