Qwest's Offer Is Beyond Its Means

David M. Ewalt, 04.25.05, Forbes.com

NEW YORK - For the first time since the bidding war over MCI erupted two months ago, Qwest Communications has taken the lead over competitor Verizon Communications in the fight for MCI. But the bad news for Qwest is that even if it wins, it loses.

Chances are good that Verizon will produce more cash and walk away with MCI in the end. Yet for now Qwest chief executive Richard Notebaert can probably taste victory. After being repeatedly brushed off and ignored by MCI's board, he's finally gotten their attention and approval. What once looked like a long shot bid to shore up Qwest's faltering financials looks momentarily plausible.

But Qwest had to ramp up its bid so ferociously to get noticed that now it's faced with a payout that's well beyond its means. At this price, Qwest's proposed merger would be so hard to pay for it would probably negate the value of doing it in the first place.

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Eric Friedebach /An Apollo Sandwich from Corky & Lenny's/

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