SC 13D/A 1 wwvy13da24.txt CUSIP No. 936750108 13D/A Page 1 of 10 Pages SECURITIES AND EXCHANGE COMMISSION WASHINGTON, DC 20549 ---------------- SCHEDULE 13D/A (Rule 13d-101) INFORMATION TO BE INCLUDED IN STATEMENTS FILED PURSUANT TO RULE 13d-1(a) AND AMENDMENTS THERETO FILED PURSUANT TO RULE 13d-2(a) Under the Securities Exchange Act of 1934 (AMENDMENT No. 24) WARWICK VALLEY TELEPHONE COMPANY ----------------------------------------------------------- (Name of Issuer) COMMON STOCK, PAR VALUE $0.01 PER SHARE ----------------------------------------------------------- (Title of Class of Securities) 936750108 ----------------------------------------------------------- (CUSIP Number) SANTA MONICA PARTNERS, L.P. 1865 Palmer Avenue Larchmont, NY 10538 914-833-0875 ----------------------------------------------------------- (Name, Address and Telephone Number of Person Authorized to Receive Notices and Communications) February 14, 2007 ----------------------------------------------------------- (Date of Event that Requires Filing of This Statement) CUSIP No. 936750108 13D/A Page 2 of 10 Pages ___________________________________________________________ 1 NAME OF REPORTING PERSONS I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY) SANTA MONICA PARTNERS, L.P. 13-3100474 _______________________________________________________ 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) [ ] (b) [X] ___________________________________________________________ 3 SEC USE ONLY ___________________________________________________________ 4 SOURCE OF FUNDS WC ___________________________________________________________ 5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) OR 2(e) [_] ___________________________________________________________ 6 CITIZENSHIP OR PLACE OF ORGANIZATION NEW YORK ___________________________________________________________ 7 SOLE VOTING POWER NUMBER OF 114,689 SHARES -------------------------------------- BENEFICIALLY 8 SHARED VOTING POWER OWNED BY 0 EACH REPORTING -------------------------------------- PERSON WITH 9 SOLE DISPOSITIVE POWER 114,689 -------------------------------------- 10 SHARED DISPOSITIVE POWER 0 _____________________________________________________________ 11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 114,689 ______________________________________________________________ 12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES [X] ___________________________________________________________ 13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 2.1% ___________________________________________________________ 14 TYPE OF REPORTING PERSON PN Filing by Santa Monica Partners, L.P. of this statement shall not be construed as an admission that such entity is, for purposes of Section 13(d) of the Securities Exchange Act of 1934, the beneficial owner of any other securities covered by this statement. CUSIP No. 936750108 13D/A Page 3 of 10 Pages ___________________________________________________________ 1 NAME OF REPORTING PERSONS I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY) SANTA MONICA PARTNERS OPPORTUNITY FUND, L.P. 56-2393841 _______________________________________________________ 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) [ ] (b) [X] ___________________________________________________________ 3 SEC USE ONLY ___________________________________________________________ 4 SOURCE OF FUNDS WC ___________________________________________________________ 5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) OR 2(e) [_] ___________________________________________________________ 6 CITIZENSHIP OR PLACE OF ORGANIZATION NEW YORK ___________________________________________________________ 7 SOLE VOTING POWER NUMBER OF 5000 SHARES -------------------------------------- BENEFICIALLY 8 SHARED VOTING POWER OWNED BY 0 EACH REPORTING -------------------------------------- PERSON WITH 9 SOLE DISPOSITIVE POWER 5000 -------------------------------------- 10 SHARED DISPOSITIVE POWER 0 _____________________________________________________________ 11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 5000 ______________________________________________________________ 12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES [X] ___________________________________________________________ 13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 0.1% ___________________________________________________________ 14 TYPE OF REPORTING PERSON PN Filing by Santa Monica Partners Opportunity Fund, L.P. of this statement shall not be construed as an admission that such entity is, for purposes of Section 13(d) of the Securities Exchange Act of 1934, the beneficial owner of any other securities covered by this statement. CUSIP No. 936750108 13D/A Page 4 of 10 Pages ___________________________________________________________ 1 NAME OF REPORTING PERSONS I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY) SANTA MONICA PARTNERS II, L.P. 48-1289758 _______________________________________________________ 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) [ ] (b) [X] ___________________________________________________________ 3 SEC USE ONLY ___________________________________________________________ 4 SOURCE OF FUNDS WC ___________________________________________________________ 5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) OR 2(e) [_] ___________________________________________________________ 6 CITIZENSHIP OR PLACE OF ORGANIZATION NEW YORK ___________________________________________________________ 7 SOLE VOTING POWER NUMBER OF 1000 SHARES -------------------------------------- BENEFICIALLY 8 SHARED VOTING POWER OWNED BY 0 EACH REPORTING -------------------------------------- PERSON WITH 9 SOLE DISPOSITIVE POWER 1000 -------------------------------------- 10 SHARED DISPOSITIVE POWER 0 _____________________________________________________________ 11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 1000 ______________________________________________________________ 12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES [X] ___________________________________________________________ 13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 0.0% ___________________________________________________________ 14 TYPE OF REPORTING PERSON PN __________________________________________________________ Filing by Santa Monica Partners II, L.P. of this statement shall not be construed as an admission that such entity is, for purposes of Section 13(d) of the Securities Exchange Act of 1934, the beneficial owner of any other securities covered by this statement. CUSIP No. 936750108 13D/A Page 5 of 10 Pages 1 NAME OF REPORTING PERSONS I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY) SMP ASSET MANAGEMENT LLC ___________________________________________________________ 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) [ ] (b) [X] ___________________________________________________________ 3 SEC USE ONLY ___________________________________________________________ 4 SOURCE OF FUNDS WC (of Santa Monica Partners, L.P.) ______________________________________________________ 5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) OR 2(e) [_] ___________________________________________________________ 6 CITIZENSHIP OR PLACE OF ORGANIZATION DELAWARE ___________________________________________________________ 7 SOLE VOTING POWER NUMBER OF 114,689 SHARES -------------------------------------- BENEFICIALLY 8 SHARED VOTING POWER OWNED BY 0 EACH REPORTING -------------------------------------- PERSON WITH 9 SOLE DISPOSITIVE POWER 114,689 -------------------------------------- 10 SHARED DISPOSITIVE POWER 0 -------------------------------------- 11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 114,689 ______________________________________________________________ 12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES [X] _________________________________________________________ 13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 2.1% ___________________________________________________________ 14 TYPE OF REPORTING PERSON OO (LLC) ___________________________________________________________ Filing by SMP Asset Management, LLC of this statement shall not be construed as an admission that such entity is, for purposes of Section 13(d) of the Securities Exchange Act of 1934, the beneficial owner of any other securities covered by this statement. CUSIP No. 936750108 13D/A Page 6 of 10 Pages 1 NAME OF REPORTING PERSONS I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY) SANTA MONICA PARTNERS ASSET MANAGEMENT LLC ___________________________________________________________ 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) [ ] (b) [X] ___________________________________________________________ 3 SEC USE ONLY ___________________________________________________________ 4 SOURCE OF FUNDS WC (of Santa Monica Partners Opportunity Fund, L.P. and Santa Monica Partners II, L.P.) ______________________________________________________ 5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) OR 2(e) [_] ___________________________________________________________ 6 CITIZENSHIP OR PLACE OF ORGANIZATION DELAWARE ___________________________________________________________ 7 SOLE VOTING POWER NUMBER OF 6000 SHARES -------------------------------------- BENEFICIALLY 8 SHARED VOTING POWER OWNED BY 0 EACH REPORTING -------------------------------------- PERSON WITH 9 SOLE DISPOSITIVE POWER 6000 -------------------------------------- 10 SHARED DISPOSITIVE POWER 0 -------------------------------------- 12 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 6000 ______________________________________________________________ 12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES [X] _________________________________________________________ 13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 0.0% ___________________________________________________________ 14 TYPE OF REPORTING PERSON OO (LLC) ___________________________________________________________ Filing by Santa Monica Partners Asset Management, LLC of this statement shall not be construed as an admission that such entity is, for purposes of Section 13(d) of the Securities Exchange Act of 1934, the beneficial owner of any other securities covered by this statement. CUSIP No. 936750108 13D/A Page 7 of 10 Pages 1 NAME OF REPORTING PERSONS I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY) LAWRENCE J. GOLDSTEIN ___________________________________________________________ 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) [ ] (b) [X] ___________________________________________________________ 3 SEC USE ONLY ___________________________________________________________ 4 SOURCE OF FUNDS WC (of Santa Monica Partners, L.P. and certain client accounts) ___________________________________________________________ 5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) OR 2(e) [_] ___________________________________________________________ 6 CITIZENSHIP OR PLACE OF ORGANIZATION USA ___________________________________________________________ 7 SOLE VOTING POWER NUMBER OF 120,689 SHARES -------------------------------------- BENEFICIALLY 8 SHARED VOTING POWER OWNED BY 0 EACH REPORTING -------------------------------------- PERSON WITH 9 SOLE DISPOSITIVE POWER 130,889 -------------------------------------- 10 SHARED DISPOSITIVE POWER 0 ____________________________________________________________ 11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 130,889 ______________________________________________________________ 12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES [X] ___________________________________________________________ 13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 2.4% ___________________________________________________________ 14 TYPE OF REPORTING PERSON IN __________________________________________________________ Filing by Lawrence J. Goldstein of this statement shall not be construed as an admission that such person is, for purposes of Section 13(d) of the Securities Exchange Act of 1934, the beneficial owner of any securities covered by this statement. CUSIP No. 936750108 13D/A Page 8 of 10 Pages WARWICK VALLEY TELEPHONE COMPANY SCHEDULE 13D/A (AMENDMENT No. 21) Item 1. Security and Issuer. No Change Item 2. Identity and Background. a) This Statement is being filed by Santa Monica Partners, L.P., a New York limited partnership ("Santa Monica Partners"), Santa Monica Partners Opportunity Fund, L.P. a Delaware limited partnership (?SMPOF?), Santa Monica Partners II, a Delaware limited partnership (?SMPII?), SMP Asset Management LLC, a Delaware limited liability company that acts as the general partner of Santa Monica Partners ("SMP Asset Management"), Santa Monica Partners Asset Management, LLC, a Delaware limited liability company that acts as the general partner of SMPOF and SMPII (?SMPAM?), and Lawrence J. Goldstein, the president and sole owner of SMP Asset Management and SMPAM. (b)-(c) The principal business of Santa Monica Partners, SMPOF and SMPII is to invest in securities with the objective of preserving principal, building net worth, and achieving long-term capital growth for its investors. The principal business of SMP Asset Management and SMPAM is to provide investment advice to and to manage the business and affairs of Santa Monica Partners, SMPOF and SMPII respectively. Mr. Goldstein's principal occupation is providing investment advice to and supervising the business and affairs of SMP Asset Management, SMPAM, and indirectly, Santa Monica Partners, SMPOF and SMPII. The principal business address of Santa Monica Partners, SMPOF, SMPII, SMP Asset Management, SMPAM, and Mr. Goldstein (collectively, the "Reporting Persons") is 1865 Palmer Avenue, Larchmont, New York 10538. (d) During the last five years, none of the Reporting Persons has been convicted in a criminal proceeding (excluding traffic violations or similar misdemeanors). (e) During the last five years, none of the Reporting Persons has been a party to a civil proceeding of a judicial or administrative body of competent jurisdiction or is subject to any judgment, decree or final order enjoining future violations of, or prohibiting or mandating activities subject to, federal or state securities laws or a finding of any violation with respect to such laws. (f) Mr. Goldstein is a citizen of the United States of America. Item 3. Source and Amount of Funds or Other Consideration. The source of all funds for purchases of the Shares by Santa Monica Partners, SMPOF and SMPII was the working capital of Santa Monica Partners, SMPOF and SMPII respectively. The source of all funds for purchases by SMP Asset Management, SMPAM and Mr. Goldstein, as President and sole owner of SMP Asset Management and SMPAM, was the working capital of Santa Monica Partners, SMPOF and SMPII respectively. The source of all funds for purchases by CUSIP No. 936750108 13D/A Page 9 of 10 Pages Mr. Goldstein on behalf of certain client accounts was the working capital of such accounts. Such working capital may, at any given time, include margin loans made by brokerage firms in the ordinary course of business. Item 4. Purpose of Transaction. On February 14, 2007, Santa Monica Partners, L.P. submitted a letter to Mr. Joseph Morrow of the ?Issuer?. Such release of May 19, 2006 is annexed hereto as Exhibit 1 and is incorporated by reference. Item 5. Interest in Securities of the Issuer. (a)-(b) As of February 14, 2007: (i) the Reporting Persons owned beneficially, directly or indirectly, an aggregate of 130,889 Shares, or 2.4% of the Shares outstanding; (ii) Santa Monica Partners had sole voting and sole dispositive power over 114,684 Shares; SMPOF had sole voting and sole dispositive power over 5,000 Shares; SMPII had sole voting and sole dispositive power over 1,000 Shares; Lawrence J. Goldstein had sole voting and sole dispositive power over 120,689 Shares and sole dispositive power over 130,889 Shares. (c) The following is a list of transactions in the Shares made in open market purchases during the past 60 days: No change (d) No Change (e) No Change Item 6. Contracts, Arrangements, Understandings or Relationships with Respect to Securities of the Issuer. No Change Item 7. Material to be filed as Exhibits. Exhibit 1: February 14, 2007 Santa Monica Partners, L.P. submitted a letter to some shareholders of the ?Issuer?. Exhibit 2: Agreement of Joint Filing by and among Santa Monica Partners, L.P., Santa Monica Opportunity Fund, L.P. and Santa Monica Partners II, L.P., dated February 14, 2007. CUSIP No. 936750108 13D/A Page 10 of 10 Pages SIGNATURE After reasonable inquiry and to the best of my knowledge and belief, I certify that the information set forth in this statement is true, complete and correct. SANTA MONICA PARTNERS, L.P. By: SMP ASSET MANAGEMENT LLC By: /s/LAWRENCE J.GOLDSTEIN ---------------------------------------- Lawrence J. Goldstein, President SANTA MONICA PARTNERS OPPORTUNITY FUND, L.P. SANTA MONICA PARTNERS II, L.P. By: SANTA MONICA PARTNERS ASSET MANAGEMENT LLC By: /s/LAWRENCE J.GOLDSTEIN ---------------------------------------- Lawrence J. Goldstein, President SMP ASSET MANAGEMENT, LLC By: /s/LAWRENCE J. GOLDSTEIN ---------------------------------------- Lawrence J. Goldstein, President SANTA MONICA PARTNERS ASSET MANAGEMENT, LLC By: /s/LAWRENCE J. GOLDSTEIN ---------------------------------------- Lawrence J. Goldstein, President /s/LAWRENCE J. GOLDSTEIN -------------------------------------- Lawrence J. Goldstein Exhibit 1: SANTA MONICA PARTNERS, L.P. 1865 PALMER AVENUE LARCHMONT, NY 10538 WWW.SMPLP.COM Tel: 914.833.0875 Fax: 914.833.1068 Lawrence J. Goldstein, ljgoldstein@bloomberg.net Joshua M. Eudowe, jeudowe@smplp.com info@smplp.com February 14, 2007 Mr. Joseph J. Morrow, Director Warwick Valley Telephone Company Morrow & Co. Inc. 470 West Avenue Stamford, CT 06902 Dear Joe: Today I received the "Dear Shareholder" letter dated January 16, 2007 from Herbert Gareiss, Jr. Mr. Gareiss? opening sentence reads "During the past two and one half years, WVT has gone through a major transformation." The visible "major transformation" we shareholders have witnessed is that of a growing company becoming revenue stuck for six years running and a profitable operating business turned into a losing one. After a period in which shareholders witnessed annual revenue growth throughout the 1990s we have now seen revenues stuck at $27 million since 2000. Worse yet operating income has declined annually in the same period from $7.64 million in 2000, to $7.32 million in 2001, to $5.27 million in 2002, to $3.18 million in 2003, to $1.11 million in 2004, and to the point that in 2005 a LOSS of $2.95 million was reported and the latest available report showed that losses continued to mount in 2006 as the first nine months showed a LOSS of $2.89 million compared with $2.58 million in 2005. If the opening sentence of Mr. Gareiss? letter has an air of familiarity ? it should. In November 2004 Mr. Gareiss issued what he said would be "the first of a series of informational newsletters designed to keep you [shareholders] informed about developments within your Company.? The letter had at least two untruths. The first untruth was that it was to be one of a series. Yet there was only but one more. After the second letter, without a word "newsletters" were no more. Only deafening silence was heard. So much for keeping us "informed." The second untruth was "This is an exciting time for WVT. We have tremendous opportunities before us and a dedicated, talented work force ready to tackle them. The Board of Directors and the entire staff at WVT wish you a happy and prosperous holiday season.? What were the ?tremendous opportunities? Mr.Gareiss wrote about? Where are they now? As for the ?Board of Directors?, since they extended their good wishes in November 2004 we have seen four of them resign, namely, Fred M. Knipp, Joseph E. DeLuca, Rafael Collado and Corinna S. Lewis. Furthermore, EVERY single officer of the Company has resigned, namely, the President ? CEO, the CFO and each and every other titled executive listed in the WVT proxy statement and annual report. Today we have only an interim CEO, who is costing more than twice the annual salary paid to Herb Gareiss, and an interim CFO, each of whom are employed under temporary and exorbitant month to month contracts. As for the ?entire staff,? about which by the way, Chairman Buckbee said the following just this past November, in a press release dated November 9, 2006: ?We look forward to working with the Company's management team (everyone of whom have since resigned) and employees to provide significant value and innovative services that the marketplace demands,? we are only left to wonder which employees he was referring to since WVT had recently announced substantial layoffs of its employee staff in a ?reduction in work force? as Mr. Gareiss termed it. Does this sound familiar? Last April 28 Mr. Gareiss ended his remarks to the assembled shareholders at the annual meeting with these words: ?WVT works hard to keep all of our shareholders informed in a timely fashion. (Really? The newsletters stopped.) Our plans and strategies are well thought out. We have a talented staff in place to execute...and we have been making the difficult, but necessary, changes to succeed.? Really? Long-time ?talented staff? has either quit or been fired. Or how about this? At the 2004 annual meeting held on yes, this is correct, November 17, 2005, seven months late, Mr. Gareiss said the following: ?SOX related charges reflected in operating expenses were approximately $2 million in 2004 and $2.2 million year to date. As we go forward, the new requirements will cause us to spend approximately $900,000 per year as compared to pre-SOX audit fees of approximately $350,000 per year.? [Spending $4.2 million on SOX compliance and thereafter $900,000 per year is outrageous for a company that at best had operating income of only a few million dollars.] Mr. Gareiss went on: ?So the real question is ?Can this be reversed in 2006?? ?Here?s how we intend to do that: 1. By implementing our strategic plan, we will add new revenues through the introduction of new products and services, some of which are already in production. We will continue to be an innovative company as we have in the past. 2. WE will continue to look for accretive acquisitions. 3. WE will continue to reduce operating overheads by replacing our systems and continuing to reorganize. ?It?s important to note that throughout this period our share price held up.? So what has occurred since November 17, 2005? As for 1. Revenues are stuck about unchanged ever since. As for 2. There have been no acquisitions. As for 3. Operating profit margins are down in the first nine months of 2006. As for the share price, about which Mr. Gareiss said ?It?s important to note? ? ?held up?? , today WVTs share price traded as low as $16.98. So much for holding up. It was $23 on Nov. 17, 2005. It is down 26% since Mr. Gareiss told us how important it was to note the price ?held up?. In comparison with the general stock market it is much worse. All the market averages have in the same period advanced to all time highs. Our WWVY shares are now down 50% from the all-time high it made a little over three years ago. Indeed, Herb Gareiss hit the nail on the head when he said in his parting letter that WVT ?has gone through a major transformation.? However, it is certainly not the transformation which Herb Gareiss repeatedly, each and every year, forecast to shareholders and the Board indicated its support for. It was on December 7, over two months ago, that you invited me to lunch and then asked me to join the WVT Board. You stated you wanted my ?good ideas?. I told you my ideas and I followed that up with a letter outlining five shareholder value creating suggestions. I told you I would be happy to meet with the Board to go over them again just as I had offered to do on many previous occasions. Each one of which made by letter to all Board members, by the way, was responded to with deafening silence. Joe, you and I met yet again along with your fellow members of the nominating committee, Directors Bob DeValentino and Doug Mello, two weeks ago on February 1. At that lunch meeting I gave you a spreadsheet I had prepared showing that now WVTs meal ticket, the OCP passive investment, was deteriorating, and I asked you questions which, although I also had asked the same ones at the annual Meeting last April, I have yet to receive any sensible answers to, and it appears you three have the same questions, and also lacked the answers ? and you are Board members. I also gave each of you copies of an article from the New York Times that appeared that very day we met, about how easy it is today to make FREE telephone calls. I pointed out, to no disagreement from you, that while WVT was taking the cash received from the now deteriorating OCP passive investment, and spending heavily on capital equipment for WVT, with zero return on this capital, that internet telecoms had only to spend money on some software and did not have the need for all the costly capital expenditures for hardware. WVT is allocating the good cash it receives from the OCP to a no return on capital business. This is nothing short of wasteful. It is dumb and eventually a path to oblivion. The Board really ought to read a Berkshire Hathaway Annual Report and take a lesson on capital allocation from the master, Warren Buffett. You will even recall that I highlighted the sentence in the NYT article which amusingly read ?Free is good, we like free.? Thus WVT is in a losing battle with these new telephone providers, as it is in the battle with cellular providers causing us to lose not only land lines but wireless opportunities as well, since we do not provide our own such service. Finally WVT is losing customers and services to its giant cable operator competitor in our area, Cablevision Systems Corp, which has also prevented our capital consuming TV initiative from being profitable. Cablevision has in fact been eating WVTs lunch. It probably is by now feasting on our dinner as well. 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. The last thing I asked you three gentlemen before the four of us broke up after lunch at Lusardi?s was: ?where is this company going to be in a year? In three years? In five years? Where are you going and how are you going to get there?? I know these questions made you uncomfortable. I am sorry for that. 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. Rome is burning and it seems you are fiddling around with the company and with me. 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? Sincerely, Lawrence J. Goldstein LJG: ala Cc: Douglas J. Mello Robert J. DeValentino Exhibit 2: Agreement of Joint Filing Pursuant to Rule 13d-1(k) promulgated under the Securities Exchange Act of 1934, as amended, each of the undersigned persons hereby agrees to file with the Securities and Exchange Commission the Statement on Schedule 13D (the ?Statement?) to which this Agreement is attached as an exhibit, as well as any further amendments filed by them with respect to the shares of common stock of Warwick Valley Telephone Company, $.01 per value per share, and agree that the Statement is filed on behalf of each of them. IN WITNESS WHEREOF, the undersigned have executed this Agreement. Dated: February 14, 2007 SANTA MONICA PARTNERS, L.P. By: SMP ASSET MANAGEMENT LLC By: ------------------------------- Lawrence J. Goldstein, President Dated: February 14, 2007 SANTA MONICA PARTNERS OPPORTUNITY FUND, L.P. By: SANTA MONICA PARTNERS ASSET MANAGEMENT LLC By: ------------------------------- Lawrence J. Goldstein, President Dated: February 14, 2007 SANTA MONICA PARTNERS II, L.P. By: SANTA MONICA PARTNERS ASSET MANAGEMENT LLC By: ------------------------------- Lawrence J. Goldstein, President