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Verizon To Acquire MCI For $6.7 Billion
An anonymous reader submits "Even after a last minute offer from Qwest Communications, MCI board members accepted a less lucrative offer from Verizon to be bought for $6.7 billion in cash, stock and dividends. The acquisition comes after Nextel Communications and Sprint Corp. partnered up in a $35 billion deal and SBC Communications Inc. and AT&T Corp. announced a $16 billion merger plan. So, what's next for the telecom industry?"
In Canada we had the following:
Telus purchased Clearnet
Rogers & Shaw swap regions so they each have cable monopoly in their region.
Rogers purchased Fido
* SBC owns AT&T
* Verizon owns MCI
After the baby bells were broken up, we had this very nice period where briefly, though you may not have had a choice of local phone providers, you had a real and serious choice of long-distance phone providers. Anyone else suspect this era is about to end? I think we're about to quickly go to the point where your regional local-phone monopoly quickly becomes a regional long-distance phone monopoly.
Who wants to take bets on how many SBC customers will be using MCI in five years, or how many Verizon customers will be using AT&T?
After two more rounds of mergers, we'll have two companies left in each area. Each with strict but unwritten agreements not to compete in each others' areas. It's the same way Comcast/Time Warner do business in the Cable TV industry right now, anyways.
and the same MCI that is the number 1 spammer according to the Spamhaus charts. Spamhaus also put out this article charging that MCI profits from spam. Verizon's getting all that.
"Ancillary does not mean you get to rule the world." --U.S. Circuit Judge Harry Edwards, speaking to the FCC's lawyer
MCI is currently the largest ISP allowing (and some consider supporting) spammers to use their bandwidth. Verizon is currently one of the most aggressive anti-spam ISPs. Some have argued they've gone to far blocking legit messages often but most of their users are happy about the spam control. How these two will mesh may be a very interesting chapter in the war on Spam.
How about we give the spammers the boot?
Eternity: will that be smoking, or non-smoking? I Corinthians 6:9-10
In the case a better predictor of the future is to look at past performance; the past performance of Michael Capellas. This guy turned Compaq around and sold it. He turned MCI around and sold it. Michael's the reliable predictor here, not the random number generator.
Assuming that much debt is a problem. OTOH, Verizon gains millions (exact number?) of consumer customers and thousands of business customers. It also eliminates a competitor.
All in all, a very smart deal for Verizon. It's just very bad for those of us that live in Verizon's territory. Good thing that I have the choice of different carriers (for now).
Verizon (in my area) has always provided top-notch service for my friends and I and their customer support has always proved useful in the end. My friends who use other carriers, Nextel, ATT Wireless, and Cingular, Always complain about bad billing, bad support, dropped calls and the like. Now Ill admit i do live in a rather populated area (Between Cleveland and Akron OH) and not Billy Bob's Mountain, NC but to each his own i guess.
blah blah blah moderators wont read this blah blah blah.
Let me share a personal experience with merging companies. I worked for a company that was in bankruptcy. After working hard for several years, the company pulled itself out of bankruptcy and went public. Not too long after that we merged with a different company. At first the new company wanted to run things the way they had before, but soon realized that they were over their heads. Everyone sat down and worked out which things would be best for the combined company. Some things were taken from one company and other from the second company. Things that worked were accepted and things that didn't work were dropped. In short, it was the ideal merger.
Unfortunately, it did not last. After a couple of years, the new company bought out a third company. This third company was in bankruptcy with little or no hope of pulling itself out. I helped on the discovery/review process and found several things in just one department where they were losing money hand over fist because of poor practices. We bought them anyway. After we purchased them, we let all the management of the parent company go, and promoted the management of the company we had just purchased. The management then tried to impose the same practices that had put them in bankruptcy on the parent company. After a few clashes with management, my job title was eliminated and I was offered severance. I took it and ran. Since then the company I was with has been purchased twice.
I really hate to think what those executives who ran at least two companies into the ground are doing now.
Great civilizations have lived and died on false theories. Don't mess up mine with a few facts.
Yes, M&A worked out so very well for HP/Compaq and AOL/Time Warner. We've certainly seen increased value and efficiency there.
Given MCI's state, I'll agree this is probably a good thing, but please remember that unfettered capitalism is also the source of a lot of evil. Capitalism is ultimately powered by greed (of one form or another), which has led to labor abuses, environmental destruction, and wholesale fraud as we've seen in the last few years.
Capitalism works best because it seems to work with the inherent human drive to succeed and improve (whereas while Communism is a wonderful theory, it does not appear to match basic human impulses). Just like the human nature that drives it, capitalism can have a very dark side that should not be ignored just because of its successes.
I don't know what kind of crack I was on, but I suspect it was decaf.
One of the reasons that MCI/Worldcom ended up mostly bankrupt was the wave of aquisitions that they indulged in. They'd use the paper value of each aquisition to buy the next one. (With a little criminal accounting along the way.) The savings by operating in volume never materialized and they chopped technical staff to the bone, affecting service.
One line blog. I hear that they're called Twitters now.
All in the name of surviving is more like it. These acquisitions should produce one or more of two things.
1) Lower costs for the companies involved, resulting in higher profits and better returns for the companies owners (largely public shareholders).
2) Lower costs or better services for their customers.
This sounds great in theory, but I for one have never seen it in practice. How's HP/Compaq doing these days?
This wave on consolidation has long been predicted, and its probably a good thing. Otherwise the telecom industry would end up fragmented and mostly bankrupty, much like today's airline industry.
What's wrong with bankruptcy? If crappy companies like MCI can't hack it, let them go under. Their investors will be screwed, but that's their problem. They should have invested in a better company. Meanwhile, their superior competition can carry on, unburdended by MCI's debts, and take over the market.
Yes, a lot of airlines seem to be having problems these days. There's nothing wrong with that; the crappy ones, like United, deserve to go under. The good ones like Southwest can take over their customers (and buy out their planes at firesale prices).
From my POV, no one gains anything from a merger, except the investors and executives of the crappier of the two companies. We'd all be better off if they weren't allowed to merge, and the crappier company just died. The employees will get new jobs when the competitors gain marketshare and expand. The assets will be liquidated and be reused elsewhere (many times by the competitors). The executives will be out of a job, as they should be considering their poor performance, and the investors will have lost all their investments, which they deserve for poorly investing.