I never say anything nice?
By Al Lewis,
Friday, November 11, 2005
Denver-based Qwest has ... has ... has ...
"It's hard for you to say something nice about us, isn't
it?" said Dick Notebaert, Qwest's CEO.
No, I told him.
The telecom company has ... has ... has ...
"If you wrote something like that, you'd lose a lot of
readership," Notebaert continued.
Not necessarily. Readers like good news, too. They're just
not used to it coming from Qwest, which has ... has ...
"Somebody said there was a pool in a certain newsroom about
when our demise would hit," Notebaert said.
"Not here," I tell him. (The proof is that I'm not flat
broke.) So, please, let me continue. I'll say one nice
thing about Qwest, which has ... has ... has ...
... averted bankruptcy.
There. I said it. In print.
Qwest is not going belly up as once expected. Are you happy
Nearly 3 1/2 years after you arrived on the scene of former
CEO Joe Nacchio's train wreck, I can safely say that Qwest
has made it through the telecom bust without zeroing out its
shareholders in bankruptcy court.
That's quite an accomplishment since you arrived in July
2002 and declared that the B-word was not in your
vocabulary. I knew you had good intentions. I just didn't
share your optimism.
"On our agenda then was fixing the balance sheet, restating
the financials, satisfying the Securities and Exchange
Commission and the Department of Justice, dealing with
class-action lawsuits and also running a business,"
Notebaert said on a recent visit to The Denver Post. "We've
resolved each one of those issues."
Under Notebaert, Qwest came clean on its dubious deals with
Enron, Global Crossing and other wildly inflated companies.
Qwest's restatement erased more than $2.5 billion in revenue
from its books for 2000 and 2001, fueling class-action
lawsuits from defrauded shareholders. This month, the
company settled these suits for $400 million.
"A lot of people said that would cost us billions to
resolve," Notebaert noted.
Qwest also staggered payments on its $250 million civil
fraud settlement with the SEC last year, easing the pinch.
Qwest improved its service and image with its "Spirit of
Service" campaign, slowing the loss of customers to
competitors invading its 14-state territory. It even waged
an impressive takeover battle for MCI, though it lost.
The most remarkable thing Qwest has done under Notebaert is
pare its debt from $26.5 billion to $14.4 billion. To do
this, Qwest sold Dex, its phone-directory business, for $7
billion, sacrificing a proven cash cow.
"We had no choice," said Notebaert.
At the time, the company could barely borrow money to stay
afloat - and even then, it was at interest rates as high as
14 percent. This month, Qwest announced a convertible bond
offering, the net effect of which reduces its debt by about
$1.5 billion and improves its cash flow by as much as $300
million a year.
Qwest may even start making a profit again next year,
The SEC is still pursuing fraud charges against Nacchio.
And sources say he's likely to be indicted by the U.S.
Department of Justice before year end.
Some investors are taking a new look at Qwest's improved
condition. Its stock is inching toward $5 a share, up from
$1 and change when Notebaert took over.
"With this (latest) financing and lawsuit settlement, they
have turned the corner," said bond investor Jerry Paul of
Quixote Capital Management in Greenwood Village. "There may
be some headline risk if the Nacchio situation heats up, but
that is unlikely to have real repercussions to Qwest."
So, good job, Dick Notebaert. You deserve high praise.
Just don't read my postscript, which is just so readers
don't think I've completely flipped.
P.S. Qwest's recovery has been like watching a guy slip out
of a coma. First his fingers move, a little. Then his
eyelids. Then his lips. Finally, he's saying a few words.
It's very exciting knowing he's not going to die. You
encourage him every step of the way. You even applaud. But
you know he isn't going to be running a marathon any time
Al Lewis' column appears
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