LV tech firm in bankruptcy

David Strow

Monday, Sept. 11, 2000 | 11:10 a.m.

A Las Vegas technology company with dreams of huge growth in the Valley has declared bankruptcy and laid off most of its workforce.

Global Communications Inc.'s founder said the company isn't in danger of going under, but he says he's going to start over in Silicon Valley, not Las Vegas.

"The state of Nevada has told us ... that they don't want to help a company that's in direct competition with Sprint," said Global founder Matt Matson. "They told us if you don't like it, you can move on, so we're doing that."

Sprint is the dominant local phone company in Southern Nevada.

On Aug. 31, Global filed a Chapter 11 bankruptcy petition with the U.S. Bankruptcy Court in Las Vegas. Such a filing requests protection from debtors while a company reorganizes, rather than indicating plans to liquidate. The company listed $220,000 in debts and $5 million in assets.

Most of the debts were the result of a lease on 55,000 square feet of space the company no longer needs, and Matson said the bankruptcy was filed while the company "tries to figure out how we can handle that."

Shortly after the bankruptcy petition, Global laid off 37 of its 41 Las Vegas employees.

The move comes just days before Global was set to request tax incentives from the state of Nevada to assist its ambitious growth plans. In its application, set to be heard by the Nevada Commission on Economic Development Wednesday, Global said it planned to hire 400 employees within 12 months at an average wage of more than $24 per hour.

In its application, Global requested tax breaks on $750,000 in equipment, which would have resulted in about $40,000 in abated taxes. The company also requested $800,000 in training funds, which the company planned to use to train 800 employees.

Matson said this application will be withdrawn.

In July, the company's application for more than $1.5 million in tax breaks on $28.1 million in equipment was turned down by the commission. Part of the concern was that Global would compete with existing businesses in Las Vegas, such as existing telecommunications companies and existing media outlets, Matson said.

But Bob Shriver, executive director of the commission, also noted that a concern was that many of the jobs were being created to serve the Las Vegas market. Under state guidelines, Shriver said, breaks can be offered only for jobs where revenues are primarily derived from out-of-state markets.

"That's why his headquarters operation (on September's agenda) had a very good chance of being approved," Shriver said.

Global offers a high-speed telecommunications network that allows high-speed Internet access and television-quality video telephones through a wireless network, rather than fiber optics. Global's partner in the Las Vegas area, Nevada Broadband, still plans to launch this service in Las Vegas this month, Matson said.

But in order to build a nationwide company, Matson said he needed 700 workers almost immediately, and possibly as many as 2,500 in future years. Toward that end, Matson told state officials he wanted to build a 300,000-square-foot building in Henderson to house his growing company.

In June, these ambitious growth plans prompted Gov. Kenny Guinn to honor the company, along with about two dozen others in the state. The press release announcing the awards cited Global's plans to hire 750 jobs in the area.

But ultimately, Matson said his inability to find those workers in Las Vegas spelled the end of his dreams of building the company here. He insisted he'll still be making these hires in the future, but will be making them in the Bay area, not here.

"The only place we can find (skilled technical workers) is in Silicon Valley, and we've done everything we could to move people over," Matson said. "They (recruits) have the wrong idea about Nevada, and about Las Vegas particularly. It's extremely hard to overcome the gaming in their minds."

Shriver expressed disappointment with Matson's decision, but disputed his contention that good help is impossible to find.

"(Companies) have certainly consistently shown that Las Vegas can attract key talent," Shriver said. "It may not be in the numbers that Mr. Matson wanted, and it's unfortunate when you lose a tech company like that for that reason.

"We're going to talk to him, because we don't want these issues cropping up again. That's unfortunate."