The snarky highlights: Major investor critical of TeleCommunication Systems, urges sale or merger

TeleCommunication Systems Inc. is an Annapolis company that's racked up a big portfolio of technology and intellectual property around text messaging and E-911 services. The company's got a mix of government and commercial customers, and it routinely wins multi-million dollar federal contracts. As a result, it's a big employer in the area.

But its stock price isn't doing so well. After peaking nearly $10 in late 2009, it's now down to $2.23 as of this morning. And that's got J. Carlo Cannell, managing member of Cannell Capital, apparently worried enough to start pressuring TSYS to come up with a clearer vision, and consider a sale or merger. Cannell's firm owns 5.8 percent of TSYS stock.

The highlights of Cannell's Sept. 12 letter to Thomas Brandt, CFO of TSYS, which was filed with the SEC:

* Cannell apparently tried to get face-to-face meetings with Maurice Tose, the CEO of TSYS, to no avail: ""Whilst I have over the last three months lost my zeal for the hunt of Mr. Tose (twas not for a lack of effort)...." Cannell later calls Tose "reclusive."

* Cannell now says creditors have a bigger stake in the company than shareholders: "Disturbingly, shareholder's equity sunk by 43% in the second quarter of 2012 after increasing each of the prior 20. This has had the odious effect of reducing the equity value to the levels of three years ago, precisely the time that TSYS issued $103.5 million of 4.5% convertible notes for questionable acquisitions."

* Cannell argues the company needs a strategic direction, making reference to the Naval Academy backgrounds of Tose and others with TSYS: "In nautical terms (which should resonate with the background of many of your brethren) is the hand of the reclusive skipper (Tose) positioned firmly on the tiller?"

* Ouch, from Cannell: "It is my opinion that real estate, uranium, certain miners, and sundry community banks now offer superior returns to defense communications but it is not my role or desire to convince you of such in this filing."

I'll be following up with Cannell and TSYS. Stay tuned. 

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