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4.26.01 Bambi Francisco, CBS.MarketWatch.com Better yet, Overture said it expected to grow sales by 64% to $473 million 2002, up from $288.13 million 2001. It also expects to nearly triple earnings to 94¢ per share 2002 from 32¢2001; consensus est. was 87¢. Overture's renewed momentum presages long-term arrangement with AOL Time Warner, as well. "We continue to believe AOL deal will be renewed (90% confidence)," wrote Merrill Lynch. Overture said that more than 50% of its traffic came from its portal partners. This is up from 40% in the Q4.
The big news, however, came in conference call late Thursday, when Overture said it extended Yahoo deal
another 3 years. Not only would Overture see healthy year, now hasn't overhang on its shares. Overture started
year as high as $42 but had pressure on concerns it might lose critical deals. Who's got the leverage now?
4.18.02 Ryan Naraine INT Media [ Looks like Hollywood jewish counter to D.C. arab ploy by Carlyle Group to use 9.11.01 to consolidate NYC fiscal markets & govt in D.C. via labor marketing. Carlucci exposed his flank when he let them hedge w/ SBC buy-in. So much for the omnipotence of secret NatSec budget. ] 30 HotJobs job categories incl govt, law enforcement/security, pharmaceutical/biotech, and non-profit/volunteer opportunities. Yahoo! to advertise HotJobs job listings on geographic-based Get Local sites providing data for over 36,000 cities across the U.S. "Employers & recruiters will access 2.4 million resumes available from Yahoo!, in addition to the 7.8 million resumes posted on HotJobs," the company said. |
4.25.02 AP Earlier Thursday, Overture Services extended AOL existing agreement through 5.1.02. March expiration of orig. 19 month contract was extended through 4.24.002 to allow for further negotiations. The 2 companies split revenue generated when users click on listings.
4.24.02 AP Rosensweig was president of online provider of news & informationCNET since merger of ZDNet & CNET in 2000. Before that, he worked for 18 years at Ziff-Davis in several jobs, incl CEO & president of ZDNet 1997 to 2000.
4.19.02 Christopher Saunders INT Media
Bulk of Moloshok's career spent at Warner Bros., where current Yahoo! chief exec. Terry Semel (then co-CEO)
helped engineer studio's spectacular turnaround. Ties between Moloshok & Semel are tight. Moloshok also
managing dir. at Semel's Windsor Digital Internet investment firm shortly after his departure from Entertaindom.com
in 2000. Moloshok was Yahoo! consultant since Oct.; Coleman said he was "instrumental building deeper
relationships with major film & broadcast studios, leading recent agreements with Fox Filmed Entertainment
& Artisan Entertainment."
4.27.02 Kyodo News
4.15.02 Reuters ¥132 = $
Tsubasa Research Inst. analyst Motoharu Sone said Softbank likely to sell more Yahoo shares . "I don't think
Softbank is fixated on keeping Yahoo stake ," he said. "Co. still has about ¥100 billion worth of latent profits in
its remaining Yahoo holdings." Debt reduction became Softbank's main focus as credit ratings agency Moody's
Investors Service in Feb. downgraded Softbank's long-term debt ratings to B1 from Ba3. For Softbank, deteriorating
credit rating means rise in debt service costs. 3.29.02 Softbank held ¥210 billion worth of corporate
bonds. In past year, Softbank sold Yahoo shares, online brokerage E*Trade Group Inc, U.S. communications equipt maker UTStarcom Inc and digital satellite broadcaster Sky Perfect Communications Inc. Analysts voiced concerns about Softbank's financial health as its investments turned sour on global high-tech slump and new ADSL business has yet to generate profits. As of 4.16.02 total market valuation of Softbank stake in publicly traded companies was ¥861.7 billion. Investments now have latent profits of a net ¥645.3 billion. Tue. Softbank shares fell 0.44% to ¥2,285 against 1.88% rise in the benchmark Nikkei 225 average Shares fell 95% from lifetime highs hit 2 years ago. |
12.27.01 Erin Joyce INT Media
HotJobs made inroads past year in corporate headhunting arena with AgencyExchange.com site targeting staffing agencies & corporate hiring managers.
HotJobs said it will charge headhunters $700 per month membership fee to use its searchable directory of
corporate candidates in announcing AgencyExchange.com offering last Dec.
4.22.02 AP
4.22.02 Mike Magee µInquirer |
The Yahoo-newspaper partnership began last November when 7 news companies teamed up to sell employment ads through Yahoo's classified job site HotJobs. The consortium has been growing since and will be strengthened considerably by the addition of McClatchy Co., the nation's second-largest publisher by circulation, the executives said.
The deal with Yahoo will allow the newspapers to gain access to Yahoo's giant audience of hundreds of millions of daily viewers. For its part, the Web portal will be able to take advantage of the local news content and advertising sales forces of the newspapers.
One newspaper executive called McClatchy, owner of the Sacramento Bee and 30 other newspapers, "a huge swing vote in the industry" whose participation could encourage other companies to sign on with the Yahoo newspaper partnership.
Right now, the consortium includes Cox Newspapers Inc., Hearst Communications Inc. and MediaNews Group Inc., which publishes the Daily News, the Pasadena Star-News and the Long Beach Press-Telegram.
An executive at another large newspaper company said: "Is this a cure-all to our ills? Probably not. But we are very excited about it. It's a lot of revenue at a time we need it a lot."
Both executives asked not to be named because they hadn't been authorized to speak in advance of a formal announcement, which could come as early as Monday. Spokeswomen for both Yahoo and McClatchy declined to comment.
The agreement would come on the heels of a deal with Viacom Inc. in which Yahoo agreed to place so-called sponsored search and short text ads on 33 of the media company's websites, including MTV, Comedy Central and Nickelodeon.
Yahoo hopes to close the gap with Google Inc. in part through such cooperative agreements with "old media" companies. The newspaper industry has been trying for more than a decade to form a single consortium to increase the reach of online advertising and content.
The most concerted effort came in the mid-1990s. A $25-million investment by 9 newspaper companies in the New Century Network produced very little ad revenue, and the initiative was scuttled amid considerable squabbling.
The sense of urgency has grown considerably, with newspapers in 2006 losing revenue for the first time during a period of economic growth. The advertising losses seemed to accelerate for many companies in the first quarter of 2007.
The newspapers will use advertising service technology developed by Yahoo that will allow airlines, phone companies, investment firms and other large national advertisers to make a single buy to reach multiple markets.
The Internet portal has agreed to place prominent links including on section fronts for Yahoo Sports and Yahoo Finance that will drive readers back to local newspaper websites, one of the newspaper executives said. The newspapers will, in turn, integrate Yahoo's Web search engine into their Internet sites.
The consortium is notable for companies it doesn't include: Gannett Inc., which publishes 90 dailies including USA Today, and Tribune Co., the third-largest publisher by circulation, which produces the Los Angeles Times and Chicago Tribune.
A Gannett spokeswoman said the company was engaged in continuing conversations on the subject of partnering with a Web portal. Tribune Interactive pres. Tim Landon said the company was continuing "an active dialogue with key players in the publishing industry and large online players."
Although industry experts held out hope that the 2 newspaper giants someday might join Yahoo, the companies have been investigating other alternatives. Past animosities could also prevent a unified effort.
Gannett & Tribune executives late last year were reported to be planning their own online consortium, one that McClatchy also considered joining. That would have put the 3 biggest newspaper companies in an alliance and offered a one-stop solution for national advertisers.
But McClatchy and other newspaper companies had privately expressed unhappiness with Gannett & Tribune. The disagreement originated with the job search site CareerBuilder.com.
Gannett & Tribune own 85% of CareerBuilder. Other newspaper companies wanted to sell ads through the company. But executives at several of the news outfits complained that Tribune and Gannett demanded too big a cut of ad revenue.
The papers that would eventually ally with Yahoo considered Gannett and Tribune too centrally controlled and less collaborative. Some of the executives not signing on with Yahoo, meanwhile, accused their peers in the new consortium of giving away their news and advertising franchises in their haste to expand on the Internet.
Rude setback for Chairman Fredric Rosen, controversial yet celebrated executive who was the architect behind the
meteoric rise of Ticketmaster. But after taking the reins at Key3Media 2.5 years ago just as the tech sector's bubble
was starting to burst, he's nearly out of options to keep Key3Media independent.
"This has been a very brutal, painful environment," Rosen, 58, said Thursday in an interview. "After 9.11.01
everything accelerated into a downdraft."
Key3Media's woes raise questions about Rosen's management. As technology industry was starting to crater last
year, the co. spent more than $100 million to buy niche trade shows focused on computer networking, the Internet
& other industries. Since then, Key3Media has had to take charges totaling more than $640 million to write
down the value of those shows & other assets.
In effect, the write-downs indicate that Key3Media vastly overpaid for the acquisitions. Rosen said it is easy, in
retrospect, to conclude that he paid too much, but tech meltdown & 9.11.01 whipsawed the co. faster &
harder than anyone could have imagined. At the time, the prices paid appeared to be "reasonable values," he said.
"To the extent that I'm subject to criticism, OK. You make the best decision you can at the time."
Rosen cut operating costs & shrunk the business to keep Key3Media afloat. The co. postponed a Comdex show in Chicago and pulled the plug on other tech shows in Atlanta, New York, Canada and Australia. Key3Media's work force has been cut by nearly half, to about 375 people. But it won't be enough.
Key3Media isn't the only one suffering from information technology trade shows' malaise. "It's a very difficult
environment for both trade shows in general & technology shows in specific," said Moody's analyst Christina
Padgett. Although still popular, the shows mirror their industries, and both IT exhibitors & the buyers who flock
to the convention centers to see the new gadgets have sharply cut spending. Fewer firms are willing to pay to
display their wares at shows, and potential buyers of IT equipt are spending less to attend the shows and,
ultimately, less on exhibitors' products.
Key3Media's fall Comdex show has been particularly hard hit, even though it's "still the best known IT event brand
in the U.S.," said industry publication Tradeshow Week research dir. Michael Hughes. After drawing 211,625
people & 2,337 exhibitors 2 years ago, Comdex garnered 124,613 visitors & 1,685 exhibitors last fall, the
publication said.
Even as more exhibitors pull back for this year, about 125,000 people will attend next week's show, Rosen
estimated.
Key3Media was created when the media firm Ziff-Davis Inc., then a unit of Softbank, spun off its trade show
assets in 2000. (Softbank also sold the rest of Ziff-Davis that year to CNet Networks Inc.) Key3Media then sold
a minority stock interest to the public, with Softbank retaining a controlling stake.
Rosen, net worth exceeding $70 million, is a blunt, aggressive executive who gained wealth, fame and controversy
at Ticketmaster. A small ticketing outfit when he took control in 1982, Ticketmaster grew into the dominant U.S.
ticketing co. and was selling 70 million tickets annually when it was sold in 1998 to Barry Diller's USA Networks.
(Diller's current co., USA Interactive, still controls Ticketmaster.)
A key part of Ticketmaster's success was signing venue owners to exclusive relationships by sharing ticket
revenues. The growth of Internet commerce also bolstered the firm. But Rosen's sharp elbows gained him a fair
number of enemies, and at one point the Justice Dept probed the co. on antitrust grounds, though it declined to
take further action.
Rosen now has to deal with salvaging Key3Media, and he might not be around after it's sold or restructured.
"Whether I stay in this business or decide I want to do something else, time will tell," he said. When asked if he's at
all to blame for Key3Media's failure, Rosen said of himself: "It happened during your watch." But given the ferocity
of the external forces that damaged Key3Media, he said, "I'm not sure anybody else could have done anything
different."
[This corrupt privatization of govt domain registry is adjunct to VeriSign owner Hewlett Packard's heavily contested merger with Compaq during same time period.]
Appreciating Overture or Yahoo? [ Stomach turning delicacy of phrasing by fresh face CBS public relations stooge pretending to be dishing industry pundit. Verisign is a credit card auth. co. that lied & cheated to get illegally exclusive govt database of Net brand names. It didn't merely "lower its outlook"; it criminally failed to issue annual report to shareholders. ]
Peering into VeriSign's foolish $12 billion bubble
Investment bank Asensio & Co. Inc. conducts specialty business in independent corporate valuations of
excessively promoted companies; it initiated research coverage on shares of VeriSign, Inc.'s publicly traded
common stock with Strong Sell & Short Sell recommendation. Asensio publishes research on companies that
are at least 80% overvalued. It finds indications overvaluation from dissemination of incomplete, inaccurate or
false information, or the failure to disclose material negative information.
Analysts expect operating income to grow 60% in the next 9 months, even though during much better market
conditions, and from a lower base, operating income grew only 24% in last 9 months. VeriSign's $12 billion
market capitalization fully discounted very high likelihood VeriSign will meet or exceed this 60% growth. This
60% minimum target is not fact-based and does not reconcile with price performance or conditions in its
product market. It is constructed without access to critical information. We believe VeriSign's stock price is
unreliable, ill founded and excessive, even under best-case scenario.
8.26.02 Joris Evers IDG News Service
DNS is the system that maps text-based Web addresses to numeric IP addresses. If a co.'s DNS service
goes down, its Web sites become unreachable and e-mail is bounced. Security problems with the most popular
DNS software, the open-source Berkeley Internet Name Domain (BIND) product, have put the spotlight on DNS
security. The Computer Emergency Response Team Coordination Center (CERT/CC) has issued several
warnings. Surveys have shown that many administrators are lax with DNS security.
VeriSign's DNS Hosting & DNS High Availability have Web-based administration options for the user and are
available for any domain, regardless of where it is registered, Choi said. Pricing for DNS Hosting starts at $50 per
domain per year and goes down with volume or up with added services, such as e-mail backup, which will catch all
e-mail to a domain when a customer's e-mail server fails. DNS High Availability costs $25 per domain name per
year, with volume discounts available and extra costs for added features, Choi said. |
VeriSign's newest customers have a hard time believing the registrar's motto, "The Value of Trust," after 7 months
of billing problems that put them out hundreds of thousands of dollars in the hole. … recipe for disaster.
… staff cut 10%, co. wide reorganization. Cost of restructuring 2 of latest acquisitions, Illuminet Holdings
& H.O. Systems, as well as severance pay to departing employees and asset write downs, reach between
$70-80 million. VeriSign chair & CEO Stratton Sclavos blames workforce reduction and $21 million net losses
Q1 2002 partly on its domain name business. " … significant spending delays in our IT & telecom
customer bases, particularly in the last few weeks of March, as well as more severe challenges in our mass
markets domain name business," he said.
… disgruntled customers. Last year, VeriSign customer Sam Martin & thousands of others fell under
VeriSign umbrella when co. bought major portion of rival Registrars.com June 2001 and made it a subsidiary. 7
months later, VeriSign officially closed Registrars.com and began migrating customers to its own database.
Therein lies the problem, Martin contends. Fully half of the invoices for his 206 domain names he owns through his
Internet service provider (ISP) business were lost in the shuffle, contracts & invoices lost in Internet ether.
Despite proof to the contrary, VeriSign billed Martin's Officeonweb.com for what they consider lack of payment on
leases to the domain names. "I have the proof that I've paid for these domains, I have the records for them to look
at," he said. "Some of the records made it through (the migration from Registrars.com to VeriSign), some didn't.
Those that didn't, I had to re-sign for the domain and essentially pay double for a name I already own."
VeriSign officials say they are aware of a problem they say affected "some" Registrar.com's customers, but
downplayed the extent of the lost invoices. "Registrars.com had minor billing & notification issues and we
worked to correct them," said VeriSign spokesperson Patrick Burns. "We told customers to work out any
(discrepancies) they had through our customer support team to resolve the problems." That's the major problem
with the whole situation, said one domain reseller who wished to remain anonymous for fear of reprisal. The staff is
a nameless entity that seems unable to resolve the problem without fielding the question to managers who often
don't call back.
Bernardo Joselevich ran popular e-mail list domain with more
than 12,000 subscribers until VeriSign error this week wiped out his records by mistake. Scrambling to reinstate his
domain, he was told the wait would be a month, death knell for someone living from Web site sales. What upset
Joselevich is VeriSign customer support crew inability to fix a problem they admit the registrar made. "CSRs were
not unwilling, some were even polite, though not all were; the problem is their apparent inability to deliver," he said.
"The most important unkept promise from them was being told despite original difficulties with their payment system
not showing my WHOIS my payment, they knew payment was received so my domain name was not in jeopardy
and there was no chance of it being erased."
Customers are taking thousands of domains & management revenues from them elsewhere.
While updating an expired domain name, one VeriSign domain name reseller in Japan (who also asked to remain
anonymous) with more than 1,000 domain under his belt found the bill for the domain in question had already been
paid. How that was possible, he doesn't know, since he never made a payment to the co.. But the VeriSign
database showed the domain was, in fact, expiring. Set to announce Q1 results, VeriSign is in a difficult position. Questions of mismanaged revenues & botched invoices are last thing co. officials want publicized. Downgraded Wed. by SoundView Technology & last week by UBS Warburg, the co. is dogged by unfounded allegations of misleading revenue tricks called "round-tripping", where co. A invests in affiliate co. B, who then uses the money to buy co. A's services, a serious charge on post-Enron Wall St. "We don't comment on rumors or innuendo," Burns said in reply. On a day Internet stocks in general led overall market higher, VeriSign shares fell more than 16%, continuing to to fall more than a dollar the next day. |
4.24.02 Reshma Kapadia Reuters [ record breaker superdump ] Home to CNN, People magazine, and tv shows like "The Sopranos," the co. also reigned in [ sic ] 2002 expectations for growth in earnings before interest, taxes, depreciation and amortization (EBITDA), key measure of cash flow, to range of 5% to 9% from range of 8% to 12%, posting Q1 net loss of $54.2 billion, or $12.25 a basic share, compared with $1.37 billion net loss, or 31¢ a share, a year earlier.
It took previously announced $54 billion charge, largest goodwill write off in corporate history in line with
accounting changes to reflect sharp decline in value of its $106.2 billion Time Warner purchase in 2000.
AOL Time Warner said its EBITDA rose 3% to $2.05 billion Q1. Revenue grew 4% to $9.8 billion with
strength in its cable systems & film business, which had recent hits incl "Lord of the Rings," offset by
weakness in its AOL Internet & music businesses. "Overall they hit the numbers. But on the EBITDA line, they
were a little below expectations on AOL, TWCable, and their tv networks," said Kaufman Bros. analyst Paul
Kim.
AOL Time Warner said in a statement that its cash earnings, excluding amortization of goodwill & charges,
rose to 18¢ a share from 16¢ a share a year-earlier.
"Overall, except for online advertising, performance of our businesses remains at least as strong as we expected
when we provided our earlier outlook, and we anticipate that they will collectively drive growth this year," Chief
Executive-designate Richard Parsons said. |
4.19.02 Jim Wagner INT Media
When AOL bought Time Warner cable network, the second-largest domestic, it immediately became a rival of
Comcast , Cox , Charter and other cable companies. Because federal requirements for open access on these
networks were never realized, AOL has to strike a deal with those networks for inclusion to provide third-party
services. According to many reports, those cable companies are seeking advantageous advertising revenue
agreements, which AOL so far hasn't agreed to sign. Because nothing forces the other cable companies to deal
with competitors, AOL is left out of a major portion of the broadband loop. So far, AOL's cable rivals have penned
deals with major national dial-up ISPs like EarthLink & United Online (formerly Juno & NetZero).
ARS, Inc. broadband industry analyst Mark Kersey said there's no real reason why other cable carriers would want
to open up their networks to one of their biggest rivals, even though most cable networks don't physically share the
same space or compete head-to-head. "(AOL) is trying to sign open access agreements with Comcast & other
cable companies, so Comcast certainly has no incentive to open up its network to a rival," he said. "It's definitely a
problem; the merger set AOL back in that regard."
AOL Time Warner can't picking & choosing third-party access. The co. had to open Time Warner Cable
network to competition involuntarily, one of several conditions placed by FCC & Federal Trade Commission,
which put AOL Time Warner business operations in quandary. As more AOL customers switch to broadband, they
go to someone else for high-speed connection. Wall St Journal predicts as many as one in 4 new cable customers
are former AOL subscribers. WSJ reports AOL TW Co-Chief Operating Officer Robert Pittman asked his
employees to focus on keeping fleeing subscribers as AOL acct members. According to Pittman, AOL's broadband
strategy is to go slow. "A lot of companies go broke trying to speed up the consumer adoption curve (for broadband
service)," he told the WSJ. In essence, AOL wants its customers to keep $23.90 monthly account open for basically
chat rooms & an email address in addition to a $50 monthly broadband bill. In any environment, that's a tough
sell.
CEO Herda blames troubled carrier accounts for Time Warner Telecom's revenue shrinkage . 5.7.02 Rachael King Net Economy "The quarter's results reflect our ongoing struggle with the effects of the economy," said CEO Larissa Herda during an investor call following this morning's release of the results. TWT's Achilles' heel is "the ongoing painful result of disconnects." Herda told investors. "We have churned through a lot of carrier business," she said. TWT's monthly recurring revenue from customers in bankruptcy remained at about 4%, similar to the last quarter. "Recently we have focused more heavily on retail customers," Herda said. In Q1, Time Warner Telecom netted 250 new retail customers, incl Procter & Gamble, Fidelity Investments and ReMax. "We scrutinize new carrier sales more closely," Herda said. "We're not willing to take risks on every carrier opportunity." TWT's top line also was hit by reductions in intercarrier reciprocal compensation. The CLEC posted only $16.8 million in reciprocal compensation revenues for Q1 2002, down 30% from Q1 2001 and 22% from Q4 2001. That decline was caused by rate reductions mandated by the FCC & other regulatory bodies, said CFO Dave Rayner. "We expect this trend to continue," he added. The increase in EBITDA can be attributed in part to TWT's efforts to control costs. In Q1 the CLEC finished the shutdown of its Vancouver network-operations center and integrated it into its Denver NOC. That move resulted in 200 job cuts. TWT laid off another 140 workers in April. TWT slashed its capital expenditures to $36.9 million in Q1 2002, compared with $95.6 million spent Q1 2001. The company's net loss grew, however, from $28.7 million in Q1 2001 to $43.1 million in Q1 2002. |
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Cox Deal Seen as Boon for AOL, Analyst Says 4.22.02 Reuters
New York World's largest media co. AOL Time Warner Inc. AOL.N could find the pathway
out of doldrums is a deal w/ No. 5 cable operator Cox Communications Inc. COX.N , said Kaufman Bros.
analyst Paul Kim Monday. ATW, owner of the No. 2 cable operator Time Warner Cable, has fallen out of favor with
investment community in recent months because of slowing growth of its AOL Internet service and the inability to
move those Internet subscribers into the high speed world. But a combination of Cox & TWCable would create
the second largest U.S. cable operator with over 19 million subscribers, after AT&T Comcast's 22 million
subscribers, assuming the latter deal gets regulatory approval. Time Warner-Cox deal could give AOL access to an
additional 6.3 million cable subscribers who could potentially become customers of its high speed service.
"A combination with an entity such as Cox Communications could create greater scale in a further consolidating
environment without having to materially alter financial leverage," Kim said. "This could increase the addressable
platform for cable carriage for AOL Broadband." ATW executives declined to comment. Cox executives, for its part,
have publicly said that it feels no need to increase its size, but it would continue to look at any opportunities that
make sense. Both ATW and Cox were bidders for AT&T Corp.'s T.N cable assets last year, but lost out to Comcast
Corp. CMCSK.O , which is paying $34 billion in stock. | |
|
CNN chairman makes news with resignation Walter Isaacson's decision to join a think tank comes at a crucial time for the AOL unit. 1.14.03 Elizabeth Jensen & Sallie Hofmeister L.A. Times
NY Walter Isaacson abruptly resigned Monday as chair & CEO of CNN News Group after just
18 months, a period during which he oversaw an overhaul of the cable news network, but was unable to stop rival
Fox News Channel from surpassing it in the ratings.
During a conference call with reporters, Isaacson said he "loved the journalism," but was less comfortable with the
management responsibilities that accompanied his post. He said he was not pressured to leave. Isaacson's
resignation comes one day after AOL Time Warner chair Steve Case said he would step aside in May.
Company executives said that by turning to an insider, the transition would be "seamless." Eason Jordan, also a
22-year CNN veteran, will remain in charge of news gathering.
Although Isaacson had solid journalistic credentials, not all CNN staffers took to his New York swagger. Isaacson's
family never moved to Atlanta from NY suburbs. During the week, sources said, he frequently would express
unhappiness at being away from them.
Still, Isaacson's departure could lead to more stress at the news organization, at least temporarily. CNN is feeling
the pressure of competing with Fox as it gears up for costly coverage of a possible war between the U.S. and
Iraq.
Among changes Isaacson brought to the network were the launch of "American Morning with Paula Zahn," as well
as new evening interview shows anchored by Connie Chung & Aaron Brown, both of whom left ABC News for
CNN. In his farewell letter to employees, he said CNN programming "is in a different league than it was a few years
ago." |
Case quits but questions loom AOL stock backs off high after Case says he'll give up top spot; focus turns to possible successor. 1.13.03 Chris Isidore CNN NY AOL Time Warner stock rose Monday on news that the architect of the troubled merger that formed the co., Steve Case, will step down as chairman, but the gains in the share price were muted. Case, who will stay on as a director & co-chair of board's strategy committee, said he could have remained chair but decided Friday evening that it was better for the co. for him to leave rather than face more questions about his continued role at the world's biggest media co. His decision to leave was announced Sunday evening. Asked Monday by CNN's Paula Zahn whether he jumped or was pushed, Case said "I jumped." He said only one investor and only one board member had suggested that he should give up his position, although he did not identify either individual. "At the end of the day, as we approached the May shareholder meeting, I did think there was a possibility of more noise, and that would be a distraction," Case said on CNN's American Morning. "This co. does not need any distraction. We have a lot of hard work to do."
Case is widely proclaimed as a visionary who early on saw the potential for the growth of the Internet. In 1985 at
the age of 26, he co-founded the co. that eventually would become America Online, starting with about a dozen
employees and a service for users of Commodore 64 computers. The World Wide Web and browsers that would
fuel the growth of the Internet did not yet exist.
Case conceded that performance of AOL Time Warner and its stock have been a disappointment. "I was the
architect of the merger. The co. has not done well; it certainly has not done anything that anyone would have
expected when we did the merger, so it's not at all surprising that the disappointment would be directed to me," he
told CNN.
AOL Time Warner stock rose about 2% Monday afternoon after trading as much as 3.5% higher earlier in
the day. But the shares tumbled by half last year and are off about 80% compared to AOL shares when the
merger was announced, and some market veterans said the upside, at least for the time being, seems limited.
Gerard Klauer Mattison & Co. analyst Jeffrey Logsdon said he doubts the co. will move to undo the merger and
spin off AOL, world's biggest Internet service provider, despite the unit's problems. "Clearly there's been an
undervaluing of the Time Warner assets. The question is how you unlock that value?" Logsdon said. "But I think
there are a lot of tax considerations around a possible spinoff that has a lot of negative implications for the co.."
Plans for Case's departure come amid speculation that the co. is close to writing down the value of its assets by
billions due to the reduced value of America Online since the merger. The move would come after a record $54
billion charge a year ago and could cause further problems for its already strained balance sheet. |
Sharp drop in AOL stock has prompted criticism from many shareholders, incl co. vice chair Ted Turner, largest
individual shareholder, who has seen his personal fortune fall by billions with the decline in the stock. Turner said in
a statement, "I admire Steve Case's decision to put our co. & its employees first, and I am delighted that he
will remain on the board & be active because frankly, we really need his experience and vision."
Wall St Journal reported that Gordon Crawford, executive at Capital Group, AOL's biggest institutional shareholder,
had lobbied hard for Case's departure. Crawford was not available for comment Monday, and his office had no
statement on Case's planned departure.
No successor for Case as chair was announced nor was any timetable for a decision given. But the AOL Time
Warner board has a host of candidates it could choose from. Oakmark Funds portfolio manager Bill Nygren, a
partner at Harris Associates, which holds about 40 million AOL Time Warner shares, said that he could support
AOL Time Warner CEO Parsons taking the chair as well. But he added he's not overly concerned about who is
named the next chair.
"One of the odd things about covering AOL Time Warner as a portfolio manager [is] there seems to be much more
interest in the personalities in the different positions at the co. than in the value of the assets," he said.
Case's departure continues and in some ways completes the loss of influence of executives from the AOL side of
the merger. When Time Warner vet Gerald Levin left his CEO position of the combined co. last year, he was
succeeded by Parsons, another Time Warner vet, not Bob Pittman, Case's former No. 2 at AOL who was also co-
chief operating officer of the merged co.
Pittman left the co. in July as 2 Time Warner veterans, Don Logan & Jeff Bewkes, assumed more power, with
Logan getting ultimate responsibility for AOL. When the AOL unit named a new president in August, it was an
outsider, Jonathan Miller, veteran of USA Interactive, who was chosen for the job.
AOL has seen its key advertising & commerce revenue fall, along with its profits. Long-term ad deals signed
before the bursting of the Internet bubble are expiring. Some of its 35 million customers are changing from its dial-
up service to high-speed Internet connections with their cable or phone companies, or lower-cost dial-up service
offers.
The last year also has raised questions about the accounting practices at AOL before the merger, which some
critics suggest had improperly inflated its stock price. In Oct., the co. restated past results, erasing $190 million in
revenue and $97 million of operating income in the previous 2 years.
Justice Dept & SEC are still probing AOL's accounting, although co. executives maintain there was no wrongdoing. Case told CNN Monday that the investigation now is in the hands of govt officials, CEO Parsons and Chief Financial Officer Wayne Pace. He said he always tried to make sure the co. did the right thing and that he feels good about the way he conducted himself.
On Wednesday evening, Metromedia announced annual report filing delay to SEC after it missed 4.16.02 extended filing deadline. 2 weeks after missing payment on $674 million in bonds & notes, default triggered by missed payment to Nortel Networks on $231 million note, Metromedia announced it missed a $30 million payment to Verizon Communications affiliate on $975 million in notes. These defaults further complicate $611 million financing arranged last fall after it missed a payment on part of that deal, triggering cross defaults on other notes. Co, blames "general downturn in the global communications industry"; Metromedia officials said they are restructuring operations to include possible $50 million sale of their Internet exchange, PAIX.net, Inc., along with an equity investment in the buyer's co.. Escrow payments on the transfer at closing would cost roughly $4.5 million, while the remaining assets would be used to pay off debts. |
Irate investors attack Nortel; guidance unchanged 4.25.02 Ian Karleff Reuters
HALIFAX, Nova Scotia After 4 hours of intense questioning &and stinging criticism from irate
investors, Nortel Networks Corp. chief exec. Frank Dunn said profits will not be sacrificed for the sake of raising
short term revenue. Dunn made the comments following long annual meeting in Halifax, Nova Scotia, where
investors dragged the co. over the coals on everything from executive compensation, to vendor financing and
more than 90% drop in the telecomn equipt maker's share price. "Could I sign deals that don't make a lot of
sense in the long term? Of course I could. But it's all about winning the right business," said Dunn. The weary
Nortel CEO boasted the co. made recent inroads with customers that have never before used Nortel gear,
specifically, deal with former BT Cellnet unit MM02 in Britain for next-generation wireless equipt worth $1 billion,
and trial with China Telecom for equipt that runs voice traffic over the Internet.
Nortel shares rose 4¢ Canadian to close at C$5.80 on Toronto Stock Exchange Thursday, down sharply
from their 2000 high of more than C$124. Shares closed up 10¢ at $3.78 in NY. Nortel told investors when it
reported Q1 earnings earlier this month, sales weren't expected to rise or fall much from the $2.91 billion recorded
in fy Q1. It said profits would not materialize until quarterly sales topped $3.5 billion. For all 2002, analysts expect
sales of only $12.7 billion, less than half 2000 peak level $27 billion sales . Telecom boom a fading memory,
customers keep firm grip on their wallets and upstart telecom vendors continue to go bankrupt.
But some shareholders were more intent on examining the past, and questioned how Nortel's former CEO John
Roth was still on payroll at $1.5 million for 2002 after resigning with more than $123 million in stock option profits.
"Where is Mr. Roth? Is he not here to face the wrath of shareholders. This is the worst failure in Canadian business
history. Instead of confronting that, you give us a history lesson," said Robert Verdun, who hijacked the meeting
with an endless barrage of questions. Verdun said he represented 75,000 shares by proxy to complain Nortel
executives continue to get pay raises despite extreme losses and book value per share shrunk to a mere $1.50.
Much shareholder criticism centered on rising executive compensation, even while co. fortunes flagged. "Since when is poor management rewarded," asked shareholder Karl Reuschel, noting Roth saw his pay climb from $812,000 in 1999 to $1.4 million in 2001, despite severe drop in sales. "I call on you to review compensation packages," he added. The co. responded to & acted on requests to relinquish Deloitte & Touche LLP of all consulting roles outside its role of auditor of co. books.
Members Of Rigas family indicted
John Rigas's 2 sons, Timothy J. Rigas & Michael J. Rigas, were sr executives & Adelphia board
members. Also indicted were former finance vp James R. Brown & former internal reporting dir. Michael C.
Mulcahey. All 5 men were arrested in July and released on bond. John Rigas, who kept a low profile since he was
forced to resign in May, issued a statement defending himself & his family name. "My family & I have
always acted with integrity & honesty and are committed to restoring our credibility & that of Adelphia,"
the statement said.
The indictments are the latest in a series of high-profile moves by prosecutors against executives who have been
accused of using their positions to defraud investors and use corporate funds to subsidize lavish lifestyles. During
the past several months, federal prosecutors have also arrested & charged former executives at WorldCom
Inc., Tyco Intl Ltd. and ImClone Systems Inc. biotechnology firm. Among the charges filed against the Rigases is
that they improperly used Adelphia funds to cover more than $250 million in personal stock losses. Prosecutors
also allege that John Rigas failed to disclose receiving $13 million in corporate funds to build a golf course on land
he owned. Rigas family members also lived in Adelphia-owned Manhattan apartments and freely used corporate
jets without reimbursing the co.
In addition to the use of corporate funds for private expenses, prosecutors have alleged that the Rigases & the
other Adelphia executives conspired to make misleading statements to investors, lenders and analysts in an effort
to hide the co.'s failing financial condition. The indictment also says that Adelphia's board agreed to sell $400
million worth of co. securities to the Rigases in an effort to reduce the co.'s ballooning debt, but the family
never paid for the stock after it was transferred. "The Rigas defendants & their co-conspirators exploited
Adelphia's byzantine corporate & financial structure to create a towering facade of false success even as
Adelphia was collapsing under the weight of its staggering debt burden and the defendants' failing management of
the co., and the Rigas Family lined their pockets with shareholder dollars," U.S. Southern Dist. NY atty
James B. Comey said in a statement.
The indictment focuses on a "co-borrowing" facility set up by the Rigases & Adelphia. Prosecutors alleged in
the indictment that the co. failed to disclose that it was liable for $2.3 billion borrowed by the Rigas family under the
agreement. In his statement yesterday, John Rigas said the co-borrowing agreements were "legal & proper."
He said that the agreements involved some of the largest banks and that they were approved by Adelphia's outside
directors. In addition, Rigas contended that the loans were reviewed & signed off on by Adelphia's outside
auditors, Deloitte & Touche LLP. The accounting firm was fired by Adelphia in June.
John Rigas's atty Peter Fleming said the co-borrowing agreement was first disclosed in a footnote in the
co.'s 2000 financial statement filed with the SEC. Although the initial $3.7 billion financial
agreement was disclosed in the footnote, the co. did not report that the Rigas family had drawn any
money from the credit facility. The co. did not mention the arrangement again in any statement until
March, when it disclosed, in response to questions from analysts, that the Rigases had borrowed $2.3
billion under the agreement. By that time, the ceiling on borrowing from a syndicate of banks had
increased to more than $5 billion.
Adelphia, still the nation's sixth-largest cable co., issued a statement yesterday in which it
highlighted the fact that the co. is under new management. "Today's indictments will help further
distance Adelphia from the wrongful conduct of the Rigas family and help advance the co.'s efforts
to recover the assets improperly taken from the Rigas family & certain associates." |
|
Tulsa OK Williams Communications Group Inc. Monday said it filed Chapter 11 bankruptcy
protection, latest telecom carrier to succumb to slumping demand, glut of network capacity and stiff competition.
Co. said it filed for voluntary bankruptcy protection in the U.S. Bankruptcy Court for the Southern District of NY in
bid to restructure debt & cut it by about $6 billion. It expects to file a plan of reorganization in the "near future." In a statement, it said its operating subsidiary, Williams Communications, LLC, is not expected to be involved in the Chapter 11 reorganization process. Williams, whose high-speed communications network connects 125 U.S. cities, said it expects to continue its domestic & international operations without interruption. The Chapter 11 filing comes as little surprise to investors as the co. has publicly said that it has been weighing bankruptcy. In addition, the battered telecommunications sector hit hard by heavy competition & overcapacity saw several head to bankruptcy court in recent months. That list includes debt-laden carriers such as Global Crossing Ltd., McLeodUSA Inc. and Adelphia Business Solutions Inc.
Williams Communcations said its bank lenders & bond holders entered into lock-up agreement as part of
which creditors would vote in favor of a reorganization plan if it followed the terms of the agreement. Lock-up
agreement is valid until 7.15.02 but the co. can obtain automatic extension until 10.15.02, if it filed a plan of
reorganization and met certain other conditions. Under the reorganization terms outlined in lock-up agreement, all
of Williams' unsecured claims converted into 100% of the stock of the reorganized co..
When the lock-up agreement was executed, $200 million of that amount had already been repaid. Firm's former
parent Williams Cos Inc. earlier agreed not to oppose reorganization plan as long as certain conditions were met.
Among others, they included ensuring that Williams Cos.' unsecured claims were treated identical to other
unsecured claims and its claims related to some service & lease agreements were not impaired.
In statement, Williams Cos said it was assessing whether it needed to further write down the amount it is owed by Williams Communications. It currently carries about $455 million in obligations from its bankrupt former telecom unit, written from $2.3 billion originally. In addition, Williams Communications also owes its former parent $154 million for leasing its headquarters, airplanes, furniture and fixtures. [ Enron style round tripping ]
Telecom capacity swaps ruled bad accounting
An accounting rationale some telecomm companies used to swap access to their networks and book the capacity swapped as revenue has been ruled invalid by the SEC, Wash.Post reported Tuesday, citing industry sources & a memo circulated to accountants. An SEC spokeswoman said the commission is not commenting on the report except to confirm that information contained in the memo is correct. The memo, which outlines the SEC policy, was written & circulated by the trade group American Inst. of Certified Public Accountants (AICPA). Companies that used the accounting rationale, which allowed them to report increased revenue, will have to restate financial results, the memo says, according to the Post.
The rationale, under investigation by Congress & federal regulators, led some telecomm companies to count network swaps as 2 separate deals in their books. Companies using the rationale would book revenue from selling access right of way then also spread the cost of buying access on another vendor's network over the course of the deal, which at times meant a quarter of a century or more.
In light of recent corporate accounting scandals, CEOs & CFOs of nearly 1,000 of the largest companies in the U.S. must now certify to the SEC that to the best of their knowledge their co.'s financial results are accurate.
The first deadline for such certifications was last Thursday, and was missed by Global Crossing & Qwest
Communications Intl, both of which swapped network capacity with other vendors, and with each other. The two
also are under SEC investigation. Their business practices are being scrutinized by federal lawmakers as well.
Giving away their future
At the same time that much of the traditional telephone world is looking to the mobile Internet as the keystone for its (I hope profitable) future, phone co. marketing enticements
are giving away the main thing that might have made it possible for them to succeed. These companies have built impressive debt loads chasing rainbows, or maybe it was just a game of one-upmanship against the ISPs. Where ISPs' drug of choice was fiber-optic cable, phone co. lost all reason when enticed by govts dangling radio spectrum just out of their reach.
The phone co. built piles of borrowed money to stand on to grab artificially limited licenses at govt-sponsored
auctions, artificially limited, in that much of what phone co. want to do could be done with unlicensed spread
spectrum. But govts don't add to unlicensed spectrum availability because that negates the phone companies
payment for exclusive use of little bits of radio space. That many auction "winners" will be crushed by the debt
created, in part, by winning and will wind up not paying for the spectrum anyway is ignored.
What do the companies plan to do with this painfully obtained wireless capacity? Some of their ideas can be seen in new TV ads from Sprint. Using impressive graphics, Sprint lists a few of the cool (at least to Sprint) things such as sending full-color pictures to each other on your PDAs or phones. You thought people just talking on cell phones while driving was dangerous. Another, supposedly wonderful thing is that you can download screen savers. I am significantly underwhelmed.
Dave Passmore explores some of the carriers' other plans in his Aug. Business Communications Review column; they are just as unimpressive. Passmore points out carriers' basic dilemma: if mobile devices open directly to the Internet, carriers can no longer capture "all the revenues" or limit customers to their services. They thereby "risk reducing minutes of use or losing subscribers". The latter would be deadly because the carriers' level of innovation is very low. But Passmore misses the reason that his first option is also deadly.
Carriers have given away thousands of "free minutes" to try to get customers' business. It is now counterproductive for a carrier to get customers to use its phones because the carrier gets no additional revenue, yet has to build up its networks.
Supreme Court to review telecoms antitrust case
Wash.D.C. The Supreme Court on Monday agreed to consider an appeal by the largest U.S. telephone carriers aiming to dismiss a class-action antitrust suit against them. |
A federal judge in New York dismissed the case for failing to state a claim for which relief could be granted. The judge ruled the lawsuit failed to allege sufficient facts from which a conspiracy can be inferred. But a U.S. appeals court ruled the judge had used the wrong standard in reviewing the sufficiency of the allegations and sent the case back for further proceedings.
The telecommunications companies appealed to the Supreme Court. They said the lawsuit under U.S. antitrust law alleges the companies engaged in parallel conduct and participated in a conspiracy, but failed to include any allegations that would establish the existence of a conspiracy under the applicable legal standard.
A number of business groups and companies supported the appeal.
"After a while, the math works in your favor," says CreditSights analyst Glenn Reynolds. "There's a sheer lack
of companies left to default." The news is important to shareholders, because developments in the bond
market foreshadowed some of the telecom sector's darkest days in 2002. Big telcos including Qwest saw their
shares hit hard by liquidity worries that came to a head when the companies' short-term funding operations were
stymied by risk-averse bond investors.
The 2002 debt-default casualty list is striking. Some of the biggest names in tech incl telcos WorldCom, which
defaulted on some $31.9 billion in debt, Global Crossing, with $5.6 billion, and McLeodUSA, with $4.6 billion; and
cable companies Adelphia, at $14.3 billion, and NTL, at $10.8 billion, left bondholders holding the bag during a
star-crossed year.
"Qwest has been the wild card," says Reynolds. "And we expect them to stay out of default, since they have
adequate asset coverage. "Basically," says Reynolds, "the telecom bubble is mostly in the past."
At last, S&P sees telecom defaults slowing
Bondholders have telecom to thank for much of the worthless paper they've been left holding in the last year. But a
new report says the blizzard of debt defaults is mostly behind us now. New data released 6.17.02 by Standard &
Poor's indicate that global corporate loan defaults will hit a record $157.3 billion in 2002. That's up a sharp
34% from a dismal 2001 figure, thanks in large measure to the tanking telecom sector, the rating agency says. The
good news, say analysts, is that 2003 looks much improved, esp. in telecom, as some of the industry's most
devastating collapses recede into history. With the big players having undergone far-reaching restructurings and
many smaller competitors having vanished, the industry is certainly at least modestly healthier now than it was at
this time last year.
12.17.02 Scott Moritz The Street.com
But having gone through the wringer once, many of these companies appear to be in better shape now, investors
say. Of course, the 2002 numbers are ugly, even if they do suggest some relief ahead. Telecom-related defaults
will soar to $74.8 billion in 2002, more than doubling last year's $34.9 billion tally, according to S&P's preliminary
report. Telecom defaults will account for half of all defaults worldwide this year, up from 30% last year.
Plenty of uncertainty remains for the coming year, what with the economy still soft and the big telcos still focusing
on offsetting their revenue declines by cutting costs. But job cuts & product shutdowns that have caused so
much investor pain in the last year should make debt defaults at the big remaining telcos less likely, investors say.
Take a few of the industry's most obviously teetering shops, such as Qwest, Lucent and Nortel. By no means are
these companies clear of the turmoil, but it appears that the last year has given them enough time to stabilize their
finances enough and outlast the bust.
[ Capitalist propensity for pump & dump speculation, however,
persists eternally & intrinsically. ]
4.22.02 Reshma Kapadia Reuters
NYC EarthLink Inc. ELNK.O said Monday its Q1 loss narrowed, but not as much as Wall St
expected, amid a slowdown in its dial-up Internet access business and higher marketing costs. The co., one of the
country's top Internet services providers, also warned that its Q2 and 2002 results could miss Wall St estimates as
it tried to woo high-speed subscribers with discounts. For Q1, the Atlanta-based co.'s net loss shrank to
$60.7 million, or 41¢ a share, from $107.8 million, or 82¢ a share, in the year-ago quarter.
Excluding items such as acquisition & merger-related costs, EarthLink said its loss narrowed to $19 million, or
13¢ a share, from $35.1 million, or 27¢ a share, a year ago. Revenues rose 13% to $333.4 million
and its total subscriber base totaled 4.9 million.
Monthly customer churn, or the number of subscribers who leave the service, improved from 4.5% in Q42001
to 4.1% in the current quarter. High-speed revenue rose 67% from a year-earlier as the co. grew its
high speed subscriber base 13% from the fourth quarter to 532,000, ahead of some analysts' estimates.
Investors have been scrutinizing this membership base because it is seen as a key growth engine.
CIBC's Corcoran expects more pressure on the stock in the near-term because EarthLink cut its 2002 cash flow
outlook to $60 million to $75 million from $60 million to $90 million. "This is seen as a high-growth, high-cash flow
story. When they start messing with that number, it impacts how people look at the stock," he added. EarthLink
shares closed down 4.6%, or 46¢, at $9.53 ahead of the news and were down at $8.61 in
after-market trade. The shares outperformed American Stock Exchange's Internet index .IIX , but are
down 27% from the beginning of the year.
Dial-up average revenue per user (ARPU), a metric many on Wall St watch, rose slightly from a year-earlier
in Q1 but broadband ARPU fell. However, Betty said broadband ARPU will stay at similar levels for a quarter or two
before moving up due to the promotional pricing it is offering. He does not expect broadband prices to slip much in
the near-term but they could fall as much as 10% in a couple years.
EarthLink's success with offering its service over AOL Time Warner Inc.'s AOL.N cable systems will lead to a "rash
of new open access pacts over the next six to 12 months," Betty said. The co. is in "substantive talks" with all
the players on such deals aimed at expanding its high-speed subscriber base, Betty said. Rival AOL has struggled
to secure such deals and its shares have fallen amid slowing subscriber growth and a murky high-speed strategy.
Betty said about 35 to 40% of EarthLink's new subscribers have come steadily from AOL. In a world where scale is very important, Betty left the door open to a possible merger, even with Microsoft Corp.'s MSFT.O MSN but he said such a deal was highly hypothetical. "All we can do is look at strategic alternatives. We would add $300 million in operating profit if we could add 2 million premium dial-up subscribers. There aren't that many (companies) that have that large of a subscriber base," Betty said. |
CFO fired over accounting scandal; SEC notified ¹ 6.25.02 David Faber CNBC
WorldCom uncovered what people close to the co. describe as massive fraud, inflating common measure of
earnings by more than $3.8 billion over last 5 quarters. The co. late Tue. confirmed its intention to restate its
earnings and said it had notified the SEC. "Our senior management team is shocked by these discoveries," said
recently-appointed WorldCom CEO John Sidgmore in a statement. "We are committed to operating WorldCom in
accordance with the highest ethical standards." WorldCom said its chief financial officer, Scott Sullivan, was
dismissed by the board of directors. The co. also accepted the resignation of David Myers as senior vice
president & controller.
Each quarter in 2001 and during Q1 2002, Sullivan allegedly transfered a similar amount of WorldCom's ordinary
costs and treat them as capital expenditure. The costs are believed to have been related to WorldCom's network,
but should not have been treated as capital expenditure. When spending is listed as a capital expense, a co.
can delay applying it against earnings and spread its effect over many years, thus keeping its profits on paper
higher. Standard accounting rules are relatively clear about what kind of purchases, for instance office equipt, can
be listed as capital expenses and which must be listed as operating expenses and deducted immediately from
profits.
In its statement, WorldCom said that "as a result of an internal audit of the co.'s capital expenditure
accounting, it was determined certain transfers from line cost expenses to capital accounts during this period were
not made in accordance with generally accepted accounting principles." WorldCom said the "amount of these
transfers was $3.055 billion for 2001 and $797 million for first quarter 2002. Without these transfers, the co.'s
reported EBITDA (earnings before interest, taxes, depreciation and amortization) would be reduced to $6.339
billion for 2001 and $1.368 billion for first quarter 2002, and the co. would have reported a net loss for 2001
and for the first quarter of 2002."
In a story posted on its Web site late Tue. night, Wash.Post, citing unnamed sources, said Justice Dept had begun
a criminal investigation. Because of its vast overstatement, WorldCom's 43% profit margins were also allegedly
a fiction, CNBC's Faber reported. WorldCom said it "promptly notified its recently engaged external auditors, KPMG
LLP, and has asked KPMG to undertake a comprehensive audit of the co.'s financial statements for 2001
& 2002." WorldCom also notified Arthur Andersen LLP, which had audited the co.'s financial statements
for 2001 and reviewed such statements for first quarter 2002. Andersen said Tuesday that its work for WorldCom
complied with professional & SEC standards.
It is unknown whether former CEO Bernie Ebbers, who resigned from the co. at the end of April, was aware
of the fraud, CNBC reported, quoting sources. The news could be a body blow to WorldCom, which is reeling from
a low stock price, a crumbling telecoms market and an ongoing SEC investigation. Shares of Clinton-based
WorldCom dropped sharply in after hours trading, falling 57¢ to 26¢ a share, down 68% from
83¢ closing price. Shares of WorldCom this year traded as high as $15 in January but have free fallen since
over concerns about the co.'s $32 billion in debt, slowing revenues and the SEC investigation. |
7.22.02 Ben Edwards, Economist magazine (London) Public Radio Intl WC is one of those few U.S. telecomms that is genuinely global. It's core franchise was serving large multinational companies. They being all over the world, WC had to be as well with 73,000 employees worldwide. Wc was put together through a long list of over 70 acquisitions by former CEO Bernie Ebbers with express purpose of building a global telecomm service. The structure is complicated and sewn together through a series of different assets in different places.
Given U.S. bankruptcy, survival of its farflung entities depends on their degree of WC equity ownership. WC layoffs
in Europe, Germany, France & Britain; Asia, Hong Kong Singapore; the main money centers in each of the regions,
are unclear. Ebbers replacement, John Sidgemore promised no immediate job cuts. Ultimately it will depend on the
attitiude of bankers. If the banks feel WC is worth holding together as a going concern, and they are willing to take
a loss on loans they extended to the co., then they will preserve some or all of those jobs. If the banks want to
break up the co., shop it around, liquidate the assets or otherwise frustrate restructuring attempts, then larger job
losses result.
12.19.02 AP
Since news of accounting fraud at WorldCom, estimated at more than $9 billion, began surfacing last spring, the
company's govt work has come under attack. In addition, the General Services Administration began examining
WorldCom's performance.
WorldCom filed for bankruptcy protection in July. WorldCom spokeswoman Natasha Haubold called the new
contract "a vote of confidence." "It's another example," she said, "that WorldCom is continuing to get new business
and win new contracts." |
Bush cabal turning U.S. into banana republic 7.15.02 Al Martin
GWBush appointed Richard Breeden special investigator of WorldCom collapse . Richard Breeden, in former
capacity as SEC commissioner, directed three separate SEC investigations of Harken Energy; Bush Sr influence gave GWBush a Get Out Of Jail Free card. Final
SEC reports clearly stated GWBush committed stock fraud. Bush didn't disclose his holdings. He sold the stock
short before. He sold out his long positions after having pumped up the stock with hype. Then he sold short before news about the negative earnings came out. Harken Energy was a
typical Bush pump-and-dump stock swindle. The Bushes manipulated stock consistently between about $1.25
& $7.75 dollars per share. Harken stock acted as an artifice to pay off favors. Bushes gave tips to pay off
favors, stock which had nothing to do with what the co. actually did with useless Bahrainian oil leases. Harken
Energy never produced much oil. …
Bush was caught playing along to the crowd again. He acted exasperated with all this talk of Generally Accepted
Accounting Principles. He said if you were to ask Americans what Generally Accepted Accounting Principles are,
nine out of ten wouldn't know. Then he throws his hands up in the air and says, "Hell, I don't even know what it
means." GWBush ran 4 businesses; all failed. Then Bush gave his big speech about unveiling a plan to fight
corporate fraud and to rectify these accounting problems. The market immediately sold off afterwards. He said the
SEC doesn't need more legislation. He did ask for more money for the SEC. It doesn't need more regulatory
authority, he says. It simply needs a billion dollar increase in its budget to enforce the regulations already on the
books.
Excellent comment on his speech by Cato Institute head Wm Niskanen. He said that Bush specifically avoided the
other half of the problem. Although he talked about the accounting problem, he deliberately sidestepped the
problem of GOP connected fraud within corporations. When Niskanen was asked on CNBC, do you think
somebody will have to go to jail just to make a point to the American people that something is being done?
Niskanen smiled and said, "I'm sure that the White House is busily looking through the short list of Democrats to try
to find someone to put into jail."
On Kudlow & Kramer tv pgm, guest was former Reagan & Bush White House counsel C. Boyden Grey
who signed his name as "Charles Smith" on the hotel register in Paris when he went with Bush Sr. for the secret
Oct. Surprise meeting with the Iranians. The other guest was Bill Seidman, accused of fraud during tenure
Resolution Trust Corp. chair, the same real estate fraud prev. practiced by the very banks whose liquidation he
oversaw. Seidman sold defaulted properties & mortgages back to cabalist friends at 20¢ on the dollar,
after they prev. sold 20¢ on the dollar 14 times before.
C. Boyden Gray was very much in favor of President Bush's new plan to get tough with corporate (GOP) fraud.
Larry Kudlow said this is very tough, preventing cabalists from serving on boards of directors ever again. C. Boyden
Grey, on the other hand, supported the new line that if you come clean and tell the truth, then you won't face
criminal sanctions. Kudlow said, "Obviously you haven't been to the Cayman Islands recently, and you don't realize that the cost of living has gone up. If you're a GOP scam in exile, with these low interest rates, you need to have at least $10 million to have even a reasonable standard of living in the Cayman Islands." |
NSA's leviathan telcom database
Echelon
Carnivore
>
Gen. Michael Hayden, in line to be CIA director, downplayed fears of abuse. "Everything that NSA does is lawful and very carefully done. And ... the appropriate members of the Congress, House and Senate, are briefed on all NSA activities. And I think I'll just leave it at that."
USA Today reported Thursday that the National Security Agency has been building up the database using records provided by 3 major phone companies, AT&T Inc., Verizon Communications Inc. and BellSouth Corp. but that the program “does not involve the NSA listening to or recording conversations.”
Sen. Jeff Sessions R-AL argued that the program “is not a warrantless wiretapping of the American people. I don’t think this action is nearly as troublesome as being made out here, because they are not tapping our phones.”
Hayden would have overseen the call-tracking program during his tenure at NSA, USA Today reported. A White House spokeswoman said Hayden’s CIA dir. nomination was going “full steam ahead.”
Existence of an NSA eavesdropping program launched after 9.11.01 was revealed in December 2005. Defending the controversial program, Bush and his administration officials have said it aims to uncover links between international terrorists and their domestic collaborators and only targets communications between a person inside U.S. and a person overseas.
The NSA has “access to records of billions of domestic calls,” USA Today said. Although customers’ names and addresses are not being handed over, “the phone numbers the NSA collects can easily be cross-checked with other databases to obtain that information,” it said.
The multibillion-dollar effort since 9.11.01 involves hundreds of contracts and as many as 50 companies, Arkin said. The contracts are mainly for overseas data mining, but with so much integration of data, the distinction is less and less easy to find, he said. Arkin noted one database contains 800 million names worldwide.
Ranking minority Senate Judiciary Committee Sen. Patrick Leahy D-VT sounded incredulous about the newspaper report and railed against what he called a lack of congressional oversight. He argued that the media was doing the job of Congress.
Bush defends spying after NSA database report
¢
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Wash.D.C. Following a report that the U.S. agency in charge of a domestic spying program is building a database of every phone call made in the country, President Bush on Thursday told the nation from the White House that all anti-terrorism efforts are within the law.
Agency collecting information on tens of millions of Americans, paper says
5.11.06 Wm Arkin, Robt Windrem, M.Viqueira NBC News
Facing new concerns in Congress, President Bush referred to the report but did not confirm or deny it and instead sought to assure Americans that their privacy is being “fiercely protected.”
“We are not mining or trolling through the personal lives of innocent Americans,” Bush said before leaving for a commencement address at Mississippi Gulf Coast Community College in Biloxi. “Our efforts are focused on links to al-Qaida and their known affiliates."
[ "Lawful" merely in the sense that NSA activity is exempt from any prosecution on the basis of NatSec involvement. ]
Hayden, who headed the NSA from 1999 to 2005, made his comments Thursday on Capitol Hill after a meeting with asst Senate majority leader Sen. Mitch McConnell R-KY. Hayden vowed to do everything in his power to fight terrorism, and “we will do so within the laws of our country.”
On Capitol Hill, Senate Judiciary Committee chair Sen. Arlen Specter R-PA said he would call phone co. executives to appear before the panel “to find out exactly what is going on.”
“We’re really flying blind on the subject, and that’s not a good way to approach the Fourth Amendment and the constitutional issues involving privacy,” Specter said of domestic surveillance in general.
[ Precisely those telcomm megacorps which have most gained from mergers & acquisitions during the Shrub admin that grossly violated antitrust law.. ]
Instead it documents who talks to whom in personal and business calls, whether local or long distance, by tracking which numbers are called, the newspaper said.
[ Traditionally called a PIN wiretap, which never did require judicial authorization, but, instead, only needing an administrative finding of need by a law enforcement agent.
USA Today said its sources for the story were “people with direct knowledge of the arrangement,” but it did not give their names or describe their affiliation.
This is not a violation of law per se. ]
Sen. Lindsey Graham R-SC told Fox News Channel: “The idea of collecting millions or thousands of phone numbers; how does that fit into following the enemy?”
Sen. Dianne Feinstein D-CA, who has spoken favorably of Hayden’s nomination, said the latest revelation “is also going to present a growing impediment to the confirmation of Gen. Hayden.”
Added Sen. John Kerry D-MA: “It is long overdue for this Congress to end the days of roll over and rubber stamp and finally assert its power of advise and consent before Gen. Hayden becomes (CIA) Director Hayden.”
Key House Majority Leader John Boehner R-OH also voiced reservations, telling reporters Hayden will “have a lot more explaining to do.” Boehner said he knew nothing of the program before the revelations, adding that he is “concerned” and determined “to find out” what is going on, NBC News reported Thursday.
“I’m not sure why it would be necessary to have that information,” he said of the phone records.
USA Today reported that calls originating and terminating within U.S. have not escaped the NSA’s attention.
“It’s the largest database ever assembled in the world,” the paper quoted one source as saying. The agency’s goal is “to create a database of every call ever made” within U.S. borders, it said the source added.
NBC News intelligence analyst Bill Arkin has compiled a list of databases and software used by the NSA and other intelligence agencies. Arkin has mined the unclassified contract data for NSA and the agencies to determine what kind of databases NSA is interested in. Arkin reported that there are hundreds of software projects to learn how to analyze hundreds of billions of transactions.
"NSA is learning how to crunch data in real time. It does them no good to have Verizon back up the truck and unload the tapes. It needs a live feed from the server. It also needs the ability to be able to crunch those numbers," he told NBC News investigative producer Robert Windrem.
“Are you telling me that tens of millions of Americans are involved with al-Qaida?” Leahy asked. “These are tens of millions of Americans who are not suspected of anything. … Where does it stop?”
The Democrat, who at one point held up a copy of the newspaper, added: “Shame on us for being so far behind and being so willing to rubber-stamp anything this administration does. We ought to fold our tents.”
[ Sanctimonious disingenuity. Congress did fold its tents in response to GOP demonstration it could reliably & consistently fix at least presidential elections and overall Congressional bipartisan balance in 2000, 2002 & 2004.
The phone companies said Thursday that they are protecting customers’ privacy but have an obligation to assist law enforcement & govt agencies in ensuring the nation’s security.
Congressional tent folding is the problem, not a valid response to this already longstanding constitutional transgression. ]
“We prize the trust our customers place in us. If and when AT&T is asked to help, we do so strictly within the law and under the most stringent conditions,” the company said in a statement, echoed by the others.
Among major U.S. telecommunications companies, only Qwest Communications International Inc. has refused to help the NSA program, the paper said. Qwest, with 14 million customers in western U.S. was “uneasy about the legal implications of handing over customer information to the government without warrants,” USA Today said.
It said the 3 companies cooperating with the NSA “provide local and wireless phone service to more than 200 million customers.”
[ Cf. preceding article to see consequences of Qwest balking at NatSec demands. ]
4.24.02 Thor Olavsrud INT Media
As Capitol Hill debates regulatory implications of AT&T Corp. plans to sell AT&T Broadband
[ nee John Malone's TCE aka @Home
], largest cable system in the country, to Comcast Corp., the business is
looking more like a diamond in the rough for AT&T. Q1 2002 results AT&T released Wed. morning said its net loss increased to $975 million, 28¢ a share, from $192 million, 10¢ a share, in Q1 2001. It also reported its revenue fell to $12.02 billion, 8.4% drop on pro forma basis, in the quarter. But the co. laid
most blame for decline on continuing struggles in long distance voice services, noting revenue declines
were offset by growth at AT&T Broadband, primarily in high-speed data, telephony and digital video.
AT&T said AT&T Broadband recognized $2.44 billion in pro forma revenue in Q1 2002, 13.9%
increase over Q1 2001, adjusted for significant cable acquisitions & dispositions, as well as
deconsolidation of Excite@Home.
AT&T also noted growth in data/IP/managed services & local services in its AT&T Business unit,
though pro forma revenue declined 8% to $6.53 billion in Q1 2002 as compared to Q1 2001. "AT&T
Business experienced solid growth in packet & local services, despite challenging economic conditions," said AT&T chair & CEO Michael Armstrong, adding, "AT&T Broadband reached an important milestone as cable telephony reached the EBITDA break-even point. The unit also hired & trained approximately 1,000 new customer service representatives and added more than half a million new telephony, high-speed data and digital video customers." Meanwhile, senators are taking a hard look at proposed AT&T-Comcast merger. Senators have little official power over whether or not regulators approve the merger, though regulatory & antitrust authorities do tend to pay close attention to lawmakers' wishes. |
AT&T gets DOJ OK on BellSouth buyout 10.11.06 L.J. Jordan, J. Dunbar, B. Meyerson and H. Weber AP
Wash.D.C. AT&T's $78.5 billion buyout of BellSouth Corp. won Justice Dept approval Wednesday, a decision that sets the stage for further reuniting modernized parts of the old Ma Bell phone monopoly broken up by govt in 1984.
The decision was immediately criticized by the FCC's two Democratic members, Jonathan S. Adelstein and Michael Copps, who characterized it as "a reckless abandonment of DoJ's responsibility" to protect consumers and smaller businesses. Copps called it a "lights-off" decision. If the deal wins final govt approval, the merger would give San Antonio-based AT&T Inc. total control over the nation's largest cellular provider, Cingular Wireless, a joint venture of the two phone companies that serves 57.3 million customers.
The department's unconditional approval "underscores the competitive nature of our industry and the pro-competitive benefits of this merger," AT&T General Counsel James D. Ellis said in a statement. BellSouth said, "We look forward to getting approval from the Federal Communications Commission in the very near future."
The House Judiciary Committee's chairman, Rep. James Sensenbrenner R-WI and other members of Congress had asked that the deal be held up until details related to 2 previous telecommunications mergers are settled and other concerns are addressed. A coalition of consumer groups issued a statement condemning the Justice Dept, saying the merger is "likely to leave consumers with fewer choices and inflated prices for a host of services."
The Bush administration "has surrendered the rights of the public to have a competitive and democratic broadband media system," said Center for Digital Democracy exec. dir. Jeffrey Chester. "The public should be alarmed about a handful of broadband giants controlling much of the U.S. digital distribution system."
The outcome at the FCC was far from certain. GOP chair Kevin Martin circulated an order recommending approval of the merger last month and probably will receive support from fellow GOP commissioner Deborah Taylor Tate.
"In this largest of all telecom mergers, why wasn't the Dept of Justice able to suggest one safeguard for protecting consumers and ensuring a competitive marketplace?" Copps said. "With the lights off at the Justice Dept, it becomes all the more important for the FCC to ensure that consumer interests have a seat at the table."
The Justice Dept decision came 7 months after AT&T announced its intentions to buy BellSouth, a breakneck pace for a merger of its size and scope. Combined, the companies generate $117 billion in revenue, operate 68.7 million local phone lines across 22 states stretching coast to coast across the southern U.S. and up through the Midwest. The merged company would employ 309,000 people, though AT&T said it plans to eliminate up to 10,000 jobs over 3 years to cut costs. Including BellSouth, the new AT&T would consist of 4 Baby Bells and the long-distance business, which was acquired by the company late last year. The other two Bells are Verizon Communications Inc., which dominates the eastern U.S., and Qwest Communications Intl Inc., the phone company for most of the Rocky Mountain and Northwest regions. |
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AT&T posts wider net loss as revenue drops 4.24.02 Jessica Hall & B.Klayman Chicago Reuters Philadelphia AT&T Corp. Wed. posted a wider Q1 net loss as stiff competition & weak economy hurt sales. Long-distance phone & cable-television giant also said its revenue would fall Q2. AT&T's core long-distance business suffered from price wars, competition from the Baby Bells and a shift by customers to wireless telephones & electronic mail. Business customers, meanwhile, reduced spending on telephone & data services in the weak economy. "Downturn in long distance is much longer & deeper than anyone thought. Carriers can't sustain business at current price levels," said Friedman Billings Ramsey analyst Susan Kalla.
AT&T shares added 17¢, or 1.2%, to $14.02 in NYSE morning trading. Stock fell 34% over past year. AT&T earlier this month said it wants reverse stock split to bulk up stock price once it sells AT&T Broadband. If plan is approved by shareholders, AT&T, component of Dow Jones industrial average, becomes first blue-chip co. to boost stock price by reducing number of shares outstanding.
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AOL, AT&T alter cable tv alliance Online unit gains link to millions of potential high-speed Internet customers 8.22.02 Thomas S. Mulligan L.A.Times
NY AOL Time Warner Inc. & AT&T Corp. agreed to dissolve their
complex Time Warner Entertainment partnership in a $9-billion deal that also will create a publicly traded cable TV
co.
Time Warner Cable, nation's second-biggest cable operator with 10.8 million subscribers, plans to go public with an
initial stock offering, perhaps as early as next year. The deal, expected to close in early 2003, simplifies AOL Time
Warner's bewildering financial structure, positions it to buy more cable TV properties while prices are down and
gives its troubled America Online unit a long-sought means of offering high-speed Internet connections to millions
more customers on AT&T's cable TV network.
AT&T will get $2.1 billion in cash, $1.5 billion worth of AOL Time Warner stock and a 21% stake in Time Warner
Cable, all of which will be inherited by Comcast Corp. when its purchase of AT&T's cable business closes this
year.
AT&T Comcast is expected to sell its stake in Time Warner Cable after the public offering. With more than 20
million customers, AT&T Comcast by far will be the nation's largest cable-TV operator and probably would attract
antitrust scrutiny if it held onto the Time Warner Cable shares.
Credit-rating firm Standard & Poor's on Wednesday placed AOL Time Warner's bonds under review for a possible
downgrade, but Standard & Poor's analyst Heather M. Goodchild said the AT&T agreement actually was more
favorable to AOL Time Warner than she expected.
Investors were cheered by the long-awaited agreement. AOL Time Warner rose 97¢ Wed. to $14.33 on
NYSE, its sixth straight daily gain. The stock, however, is down 55% year to date. AT&T shares gained $1 to
$12.18 on the NYSE.
Cable TV stocks, downtrodden all year, jumped Wednesday. Comcast leaped $3.32 to $25.08 on Nasdaq; Cox
Communications Inc. gained $2.26 to $25.65 on the NYSE, and Cablevision Systems Corp. rose $1.83 to $9.65 on
the NYSE.
Within 4 months of the deal's closing, AOL will get access to up to 5 million customers of AT&T Comcast, as the
post-merger co. will be known, in the Boston, Seattle, Indianapolis and Nashville areas. In the second year,
AOL will be offered to another 5 million AT&T Comcast homes. In the third year, at the option of both parties, AOL
would get access to another 9 million homes.
Parsons, citing competitive concerns, declined to provide the terms of the carriage deal, but Wall St Journal said
AOL would pay AT&T Comcast a stiff monthly fee of $35 to $40 per customer. AOL would charge its customers
$54.95 a month for the service, Parsons said.
The deal with AT&T Comcast should lead to other AOL Internet service deals with other cable companies, Parsons said, adding that "the industry has always followed a strong leader." "It followed John Malone when he was the fat kid in the boat, and now it's Brian Roberts." Malone, a cable pioneer, is chairman of Liberty Media Corp.
Both AOL Time Warner and AT&T had long hoped to end the awkward arrangement, but negotiations never
reached fruition under former AOL Time Warner Chief Executive Gerald M. Levin. |
Senators question benefits of AT&T-Comcast deal 4.23.02 Jeremy Pelofsky Reuters
Wash.D.C. U.S. senators raised concerns about possible negative impact proposed Comcast Corp. purchase of AT&T's Corp. cable assets could have on diverse programming & Internet access. Senate Judiciary subcommittee on antitrust chair Sen. Herb Kohl D-WI said the deal should have "meaningful conditions" attached to protect consumers. "Big is not bad, but we can't ignore the potential for a cable co. as big as AT&T-Comcast to throw its weight around," he said at hearing on the proposed deal. "We know it's good for the companies but what does it do for the average consumer?" The combination brings 22 million cable subscribers under one co. to be named AT&T Comcast, if the required regulatory approvals are received. Under its terms, Comcast will pay about $33.5 billion in stock based on the latest share price, plus the assumption of about $20 billion in debt. While admitting the deal did not present traditional antitrust concerns since the companies do not directly compete,
Congress has no direct say on whether the combination should be approved,
Comcast & AT&T argued their combination speeds high-speed Internet service deployment and digital television as well as adding competition to local phone market with its own service offering. They also said the combined co. will be able to upgrade cable systems more quickly because of economies of scale & scope as well as cost savings from the merger.
"AT&T-Comcast merger represents another major anti-competitive, anti-consumer step in consolidation of the most important industry for our 21st Century digital economy," said Consumer Federation of America research dir. Mark Cooper. Comcast shares closed down 38¢ to $27.82 NASDAQ while AT&T shares closed up 10¢ to $13.85 NYSE. |
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Amsterdam Dutch govt Friday said it agreed to sell a 12% interest in the former telecomm monopoly
KPN NV to Citigroup Inc. for about $2.3 billion. The sale of 300 million shares to the NY based financial-services
giant for euro6.78 ($7.63) apiece leaves the Dutch govt with 19.4% of KPN. The Dutch state earlier this week announced that it would cut $19 billion in costs amid a sharp economic downturn. The move also fits with the govt's strategy of privatizing traditionally govt-controlled markets, such as the telecomm industry & the postal service. The state has agreed to hold on to the rest of its stake in KPN for at least a year. KPN nearly went bankrupt in 2001 after it amassed more than $22 billion in debt buying third-generation cell phone networks throughout Europe. KPN's American depositary shares were at $7.54, down 11¢, or 1.4%, in Friday morning NYSE trading. | |
Jan. 1999 Trudy Walsh Govt Computer News
San Diego County Board of Supervisors late last year approved a plan to upgrade the county's computers
& telecommunications through outsourcing. Over the next 10 years, the price tag for the upgrade
could reach $1 billion, county officials said. Next month, San Diego will release a request for proposals to 26
companies. The contract could be awarded as early as July. The county's current system is organized around 8
data centers, outmoded mainframes and 188 LANs, many of which are not linked to one another, county officials
said. San Diego spends almost $100 million each year to keep the systems running.
San Diego chief administrative officer Larry Prior has kicked off a plan to create what he calls a virtual county,
where residents can pay property taxes, license their dogs, and request and pay for birth certificates and marriage
licenses online. Prior's plan calls for a single data center, a network of public access kiosks and high-speed
connections to the Internet. But is there a downside to this never-wait-in-line-again utopia?
The county's Service Employees International Union Local 2028 exec. dir. Mary Grillo has been an outspoken
advocate of the view that govt is not a business and should not be run like one. Grillo represents 10,000
county employees, many of whom are unhappy that San Diego ruled out the county's own IT workers as a
prospective bidding group. In a column for 8.25.98 issue of the San Diego Daily Transcript, Grillo argued govt
is fueled by taxes, not profits. "Govt is a monopoly," she said, unlike a business, which depends on a
person's free choice to buy a service. Citizens have no choice of provider for land use, police or courts. The
analogy of govt being a business is therefore false, she wrote. |
Undependable cross-border cell phone service hampers business between Baja & San Diego, "wireless capital of the world" April 2001 M.L. Kirkpatrick SD Metropolitan So it's amazing that right here in the wireless capital of the world, people can't travel a few miles to the south and stay connected without, for the most part, making intl arrangements and paying high charges. Even then, service often is spotty at best, getting worse as callers leave Tijuana and head south down Baja.
With some wireless carriers, a south-of-the-border connection is impossible. "The (wireless) boundaries are hurting
productivity of the region," says Flavio Olivieri, chairman of the SCEDC and board member of the San Diego
County Workforce Partnership. "Cross-border business has grown because it's diversified & consolidated.
Before 10 years ago, you had an emerging manufacturing industry and you had a mature tourism industry. And in
this last 10 years the industry, the cross-border industrial activity, has matured & consolidated." It is time, says
the Tijuana resident and 10-year veteran of cross-border business, for the wireless service providers to catch up
with an already booming and nearly borderless industry. "It's essential," he says. Olivieri uses Nextel for his wireless service. It allows him to stay connected almost all the way into his hometown in the La Mesa area of Tijuana. Although the extended service, which reaches almost to Rosarito Beach, is by accident, it shows how easily companies could offer service without extra fees. Of the 5 most widely used wireless communication companies in San Diego, Nextel is the only firm with this capability. Yolanda Walther-Meade runs a business that specializes in intl event management, cross-border public relations and interpreting & translating services. Dividing her time between the 2 countries, she formerly used 2 cell phones, one for family and another for business. |
Gary Swedback, director of NAI Mexico (BRE), also uses Nextel. He travels back and forth across the border daily
making real estate transactions and says the service has its pros and cons. While he can make and receive calls in
Tijuana, the service stops just before Rosarito Beach, without any additional charges to his monthly bill, he has
problems with reception within the Interstate 805 corridor. He says he gets better service in Juarez than Del Cerro,
Mission Valley and Chula Vista. "It has its trade-offs," he says. "It's a matter of efficiency & practicality." For
cell phone service past the Nextel area, Swedback's co. changes over to cell phones with service from
companies in Mexico: Celtel or Baja Celular. "Then it's a long-distance, international call."
Nextel's local service corridor includes Los Angeles, San Diego and Tijuana. However, it is more costly than most
providers for monthly service. Swedback says he pays $159 to $179 a month for about 1,500 minutes of airtime.
Although that is high, he says other services end up costing more because of the amount of time he spends on the
phone. Other providers offer monthly packages as low as $19.99; you won't find anything close to that price at
Nextel, but they don't include any free airtime coverage into Tijuana.
Walther-Meade & Swedback went with Nextel more than a year ago because it was one of only a few options
with reception capabilities across the border. Now that other cell phone companies are adding intl services to their
features, consumers have choices and can select packages based on their international call usage. "It's not as if
there is an invisible border that stops cell phone signals," says Charles Nathanson, executive director of San Diego
Dialogue. "There is a significant population living in San Diego & Tijuana who are actually residents in a
binational city. They can't live if they can't communicate back and forth. Anything that improves communication is a
huge boost."
The Dialogue, a self-funded organization out of the University of California, San Diego, researches issues of
importance and facilitates discussion among civic & business leaders and the community at large, to
encourage the development & implementation of solutions. Its main goal is to improve the quality of life of the
cross-border region. Nathanson says the best way to do this is to remove barriers to communication &
transportation.
Already, commuter lanes have successfully opened travel across the border. Nathanson and Olivieri say it's time to
do the same with cellular travel. "Calling, if made local, can be a substitute for crossing in some cases," Nathanson
says. He has a cell phone that is supposed to work while he is in Tijuana. It doesn't, so when in Mexico he ends up
borrowing from someone who has service with a carrier in Mexico. Pegaso PCS in Mexico, which uses
Qualcomm's CDMA technology, is working to create a service that won't charge roaming fees. Olivieri sees the
Pegaso move as more of a business than technological decision, one that acknowledges a need for affordable
seamless communication. Most providers, he says, are still focused primarily on the profit from high intl roaming
fees.
Judith Morgan Jennings commutes to work in San Diego from her home one mile north of Puerto Nuevo below
Rosarito Beach. She uses GTE cellular long-distance service because it meets her needs. "I use it for a comfort
zone, for emergencies," she says. "Calling in Mexico is expensive. But so far, the service seems to be seamless."
Signing up several years ago was easy; she simply called and told customer service she needed a phone that
would work on both sides of the border.
Today, customer service is a bit more challenging. GTE is no longer available in San Diego to new customers, and
the co.'s former customers have been transferred to AT&T, which bought out the area's network and
customer base. AT&T is still working to upgrade the system to its new digital service. Phone service and feature
changes are challenging to accomplish over the phone and the co. Web site is not yet accepting San Diego
customers' account numbers.
John Mendez, manager of corporate communications and public affairs for AT&T, says it is all being worked out.
Hoping customers will bear with them through this transitional stage, 3 separate AT&T storefronts in San Diego are
telling customers the change to improved service will be made by April 1. But, everyone knows, that is April Fools'
Day, and Mendez says things won't be running smoothly until at least mid-summer. He does say that customers
will be pleased they stayed with the co.. Customers who go into an AT&T store (still branded GTE for now)
can set up several types of international roaming services. Using a prepaid calling card customers can place local
and long-distance calls across the border in Tijuana, Rosarito, Ensenada, San Quintín, Tecate, Mexicali, San
Felipe, and San Luis Río Colorado. Calls made from Baja California to anywhere in the U.S., Canada or Mexico are
$1.95 per minute, deducted from the card. Placing calls in Baja requires a four-digit personal ID number so this
feature must be set up before leaving the area. The pay-as-you-go way also allows users to have intl calling
capability wherever TDMA service is available. AT&T customers currently face a 50-cent roaming fee and various
long-distance charges.
But keep in mind that AT&T still has not set up its system in San Diego. Going to Ensenada right now with your cell
phone is a shot in the dark as it is GTE's service that is currently working. When the transition to AT&T service is
final, the cost will be about 25¢ a minute for long-distance and 99¢ for roaming. "It's a $1.24 a minute
flate rate price," Mendez says. "It's predictable; users know what they're going to pay." AT&T has an agreement
with Baja Celular in Mexico for cross-the-border communications.
While a flat rate plan may be predictable, a little shopping around can make a big difference. Verizon Wireless
provides Baja coverage to its customers through an agreement with Telcel. "Our customers can roam at very
competitive rates," says Nick Montes, manager of Hispanic marketing for Verizon. "Their customers can roam here
as well." The agreement gives cellular customers on the U.S. side of the border a plan that allows them to call from
Mexico to California for 60¢ a minute plus 39¢ a minute long-distance fee. "At about 99¢ a
minute, it's the same as using a pre-paid calling card and less than using a hotel phone," Montes says. While in
Baja, calls to Baja areas are only 60¢ a minute. Although coverage cannot be guaranteed while using another
network, Montes says the Telcel coverage includes all major cities in Baja California from Tijuana to Cabo San
Lucas. However, Montes says Verizon cannot guarantee Baja coverage, "especially since we are using someone
else's network." The Baja coverage is a feature that can be added to all Verizon cell phones for no extra charge.
Fees are added only when the phone is used outside the original coverage area.
Pegaso, working with one of its main investors, Sprint PCS, is designing what is being called "border town pricing."
The agreement allows Sprint & Pegaso customers to use their PCS phones in major cities in both countries.
Scott Malone, director of sales & mktg operations for Sprint's San Diego operations, says it is the co.'s
goal to take down the border and create an easy & affordable communication plan for the San Diego market.
While the co. works on that initiative, long-distance calling fees while in Tijuana or adjoining towns vary from
39¢ to 95¢ a minute. However, Malone says, there is no roaming fee. The fee is not set because no
single provider has yet been established. This arrangement is being worked out and the information was not ready
for release in time to be included in this story.
Before roaming in Mexico, users need to visit the store to set up access. Then, while in Mexico, users dial an
international access code and enter a Sprint PCS phone number. For San Diego customers who use their phones
in San Diego to place calls across the border, Sprint offers two zone plans. For a $3.99 monthly recurring charge
and 22¢ a minute, callers can use their phone to call Tijuana and surrounding areas. Customer
representatives say service reaches all the way to Ensenada. For more frequent callers, there is a plan for $7.99 a
month at 15¢ a minute. Malone says Sprint is making a determined effort to create plans unique to San Diego
for across-the-border communication.
It's become obvious to the communications marketplace that San Diego & Tijuana relations are becoming
more important as more companies work to facilitate relationships across the border. Almost all the companies
contacted for this story were actively working on improving cellular communications across the Mexican border and
into Baja for their San Diego customers. Only Cingular Wireless did not have any coverage agreements or cellular
licensing for anywhere in Mexico at this time and no information was obtained to reveal their efforts to expand
cellular usage. "If we can eliminate these boundaries, we can take advantage of working together," Olivieri says.
"The barriers are small. We need to eliminate them to unleash the potential of the region."
Another 1,100 employees in Pennsylvania, New Jersey and Massachusetts have filed similar complaints with other arbitrators. Verizon spokesman Peter Thonis said the co. would comply with the arbitrator's ruling in NY but would wait to see how the cases in the other states play out. "We're obviously disappointed with the arbitrator's decision,'' Thonis said. "We believe we followed the language of the contract.''
Thonis said the ruling "doesn't change the need for us to face the challenges facing our business.'' But union
officials said the ruling shows just how valuable the existing job-security language is to their members. "I think my life will be in jeopardy if I ever give up that language,'' Mancino said. "Now an arbitrator has given meaning to the language. I don't think there's any way we'd ever give it up.''
labor
Verizon ordered to rehire 2,300 workers
An arbitrator ordered Verizon Communications Inc. to rehire 2,300 people in NY laid off in December, striking a
blow against the phone co. cost-cutting efforts and racheting up the tension surrounding Verizon's talks on a new labor contract. Verizon had argued that the layoffs were justified because of a weak economy and toughening competition in the phone business from rival companies and new technologies. But in a decision received Friday by the company and the Communications Workers of America, arbitrator Shyam Das ruled that those trends did not amount to discrete "external events,'' as Verizon's union contract specifies, that could justify the layoffs.
7.11.03 Brian Bergstein AP
Verizon must reinstate the workers and give them back pay, minus severance payments & unemployment
benefits they received. Employees who were forced to transfer can return to their original locations. "I've been in this business now since 1966, 37 years , and I would say it's the greatest victory in my lifetime,'' said Communications Workers of America vp Larry Mancino who represents the Northeast.
"The impact it's going to have on our members' lives is unbelievable. These people were living with very little hope
of getting their jobs back.''
The decision will loom large over talks already underway between NY based Verizon, the CWA and the Intl
Brotherhood of Electrical Workers on a new contract for 75,000 of Verizon's nearly 230,000 employees. The existing deal, which was reached after an 18-day strike in 2000, expires 8.2.03.
Verizon management is pressing the union to make concessions in job-security language, to enable Verizon to
better compete in the turbulent telecommunications industry. Verizon says that would save jobs in the long run. The union counters that such a demand "would rip the heart out of our contract.'' Now the arbitrator's decision could make it harder for both sides to compromise.
Verizon cut 18,000 jobs in 2002, mainly through attrition & voluntary buyouts, which helped lower the
domestic telecom division's "operations & support'' expenses to $22.3 billion from $23.6 billion the previous year, according to a March filing with the SEC. Mancino said rehiring the 2,300 laid-off NY workers would cost Verizon $100 million. Thonis said the cost was less than $25 million, but he would not disclose the exact number because he said it was immaterial to Verizon's bottom line. Wall Street didn't appear fazed. Verizon shares were
up 67¢ to close at $38.77 on NYSE.
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