4/05/2005

On the Verizon

Verizon Communications announced to MCI that it will not offer a superior bid if the board accepts Qwest's higher proposal. MCI has been communicating with the two companies for the past several months, but has yet come to a conclusion. The problem exists because of Qwest's financial uncertainty and Verizon's lower bid. Qwest has offered a much higher bid with much higher risk. Frustrated at the endless talks, Verizon has decided to make the move. Either MCI takes Qwest's higher bid, or it takes Verizon's stability.

3 comments:

Chuck said...

That is a tough one if I'm MCI. Yeah, it would be great to be bought out by Qwest being that they are willing to pay more. Yet that dosn't mean a thing if they would go belly up in a year. I made up my mind, I'm taking taking Verizon's lower bid for stability over Qwest's higher bid for uncertainty.

Marie said...

I think that this whole stunt is embarrassing. How long has MCI been toying with the idea to settle with Qwest. They basically have stated that they aren't going to settle with Qwest several times. It is true they might as well settle with Verizion and get it over with.

Dr. Tufte said...

BOB's post gets to the heart of the matter.

Nonetheless, in what universe are the managers of MCI supposed to protect the risk of shareholders? Shareholders got into equity in the first place because they wanted the returns that high risk entails.

Further, any shareholders of MCI can choose to diversify that risk if they feel it is appropriate. That is not the managers decision to make.

The more I hear about this case, the more I am sure that MCI is going to show up in finance textbooks in a few years as an example of bad management.