Here we go again ….

questmci Just when you get out of it, they suck you right back in. Now, investors and analysts alike are scratching their heads over this one. I for one am puzzled because it’s the math that’s driving me nuts.

Try to follow this one … MCI has approximately $6B in cash, and carrying about $6B in dept. Qwest is offering around $7B to buy the company. Qwest already has $17B that’s lugging around on its balance sheet. So let’s look at this mathematical wizardy. Qwest buys MCI for $7B, and gains access to the $6B in cash. So essentially, they use that money to finance the purchase.

MCI now becomes a company that had 6B in dept and 6B in cash to a company that has .02 cents in cash and $23B in dept. The winners, bond holders and preferred stock holders itching to cash out. Oh, I temporarily win myself when I sell my few shares. The odd thing is that over the last several months, it’s been speculated that potential MCI suitors would be Bellsouth and Verizion. Nobody even remotely considered Qwest to be in the running. But then again, nobody thought of LDDS > WorldCom.

I’ve always wondered, with the balance sheet that MCI has, and with the industry’s most highly valued customers, and MCI’s vast network, why not take the company private? I think creditors would line up to help with capital expansion. Sure the long distance market is rapidly declining, and the baby bells bought enough steak dinners to convince legislatures to enhance their welfare by locking out residental competition (due to pricing), but there are so many more opportunities. How about expanding our partnerships with cable companies to carry their long haul traffic as they exploit the backdoor into the residential market for starters.

Ahhh, the discussions are already flying around the office from what I hear. And the natives are getting restless tonight ……