The price of Starnet shares plunged from Tuesday's high of $US22.69 to $US10 in a matter of minutes after the release of news around lunchtime yesterday by Las Vegas Casino (LVC). We were about to leave for lunch when a reader drew my attention to the news. Without hesitation, we dumped all of our position in Starnet (SNMM) at the market price of $17, realizing over 1088% gain.

LVC claimed damages from what they called "a very substantial number of breaches of agreement" including "grave irregularities in their accounting systems, too many serious bugs in their software; their technical and e-cash support is extremely deficient, with very serious problems such as massive over-billing of credit card accounts." This news was reported by the well respected Yahoo and CBS Marketwatch.

Starnet issued a press release denying that it had received a lawsuit from LVC. Starnet shares rose to around $16 before finally closing the day at $14.44.

As I am writing it is 7:02 am in Berlin (Germany and 1:32am in Canada), the German markets will be opened in 58 minutes and we expect SNMM to rise, because all those who dumped the stock are going to try jumping back in.

After the market closed, Starnet Communications revealed that its wholly-owned subsidiary, Softec Systems Caribbean Inc., had indeed licensed software to Las Vegas Casino but the agreement had been terminated on July 23, 1999 due to non payment of approximately $203,000 for monthly licensing fees and had commenced collection proceedings against Las Vegas Casino,

inc.

As to whether to buy or not to buy when the market opens, we can't tell you what to do. However, we intend to take a position in this stock sometime during today when pricing is favourable to us. For those who increased their positions yesterday, congratulations for seeing through such a malicious press release.