A few days ago, the Wall Street Journal’s Dennis Berman commented in his column entitled “The Two Sides of Verizon’s Deal Making” on whether Verizon might have some responsibility for the bankruptcies of Idearc, Hawaiian Telecom and FairPoint Communications. As you may recall, I posted an op-ed piece on the subject, Idearc’s Bankruptcy – Who’s Really Responsible? at Search Engine Land not long back, and now Berman’s take on the issue appears to hold a lot of sympathy for my position that Verizon caused the yellow pages company to fail shortly after it was spun off by requiring it to do so with an unreasonably high debt load.
Berman states that while the market in 2006 may’ve allowed Verizon to take billions in the deal divesting itself of its directories corporation, Idearc, he further states:
“It took too much.”
Will there be any consequences for Verizon’s throwing off these companies with unserviceably high debt loads? Burman reports:
“These things matter greatly to how state and federal regulators perceive the company. Maine, New Hampshire, Vermont and Hawaii each are in an uproar over the FairPoint divestiture, with much of the ire directed at Verizon.”
In a brief video piece, David Berman debates the issue with Evan Newmark, who takes the opposite viewpoint that Verizon should not be held responsible for the performance of its divested companies. (more…)
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Filed under: General, Market Data, Worst Practices, Yellow Pages bankruptcies, bankruptcy, divestments, FairPoint Communications, FairPoint Communications Bankruptcy, Hawaiian Telecom, Hawaiian Telecom Bankruptcy, idearc, idearc bankruptcy, M&A, mergers and acquisitions, spinoffs, Verizon
My op-ed piece, “Idearc’s Chapter 11 Bankruptcy: Who’s Really Responsible?” published today on Search Engine Land, and in it I put forth my position that Verizon is responsible for spinning off the company with an unreasonably huge debt load, and the people ultimately paying the bill are the stockholders.
I describe in the article how Verizon spun off Idearc Media (division which publishes print phone books and operates Superpages.com among other online yellow pages), and set that company up to pay back some billions of dollars for its worth. Verizon then turned around and resold those debt instruments to other companies, fully divesting itself of ownership in the new, standalone company.
This sequence in of itself isn’t remarkable – it’s the normal process a company might go through when spinning-off part of itself to form a new company.
But, my contention is that it was done so in a highly irresponsible manner. Verizon had to know beforehand that print directory business was going into shrinkage mode, and that the debt repayment structure would simply be too much for the new company to be reasonably expected to be able to handle. If so, then this could be expected to be a form of fraudulent conveyance, and Verizon could be culpable.
Is my contention outrageous?
Well, even Idearc’s Chief Executive, Scott Klein, has been paraphrased by the Wall Street Journal as saying “Everyone was aware that ‘$9 billion was really more debt than this business could bear'”. So, Idearc was spun off with a majority of this debt from Verizon from the start – clearly set up to fail.
So far, I’ve seen maybe three different law firms filing class-action lawsuits against Idearc and its executives, based on the premise that the stock tanked due to them secretly changing policies, resulting in inflated-looking sales on the books for businesses with higher likelihoods of not paying for contracted advertising. But, I think the real culprit in all this is likely Verizon – they pushed off a part of the company with an untenable debt load, in large part to pay off debts incurred by Verizon FiOS (Verizon’s fiber optic network) expansion.
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Filed under: General, Local Search, Market Data, News, Online Directories, Yellow Pages bankruptcy, chapter 11, directories, idearc, idearc bankruptcy, idearc chapter 11, Idearc-Media, iyp, Phone-Books, superpages, telco, telecomm, Verizon, Yellow Pages
I was stunned today to read this report by Martin Bosworth at Consumeraffiars.com on how Verizon is delivering up custom search results pages to fiber-optic users when they misspell domain names. Since I started working from home here in the Dallas area this Spring, I’d upgraded to Verizon’s FiOS service, so this change would affect me directly. Indeed, after a moment’s worth of testing, I see that I am being sent to a Verizon search results page when I type in a domain name that doesn’t exist:
It’s not all that surprising that Verizon might do this, since they oppose net neutrality, but for users like myself, this is highly undesirable. I’ve been highly complimentary about Verizon’s FiOS service, because I’ve had excellent speed and high quality from it. I work from home providing expertise around internet technologies, so it’s vital that I be able to clearly experience the internet just as the majority of the rest of internet users out there, so having Verizon meddling with what’s delivered up to me is not cool.
If you all recall, another company did something quite similar to this back in 2003: Verisign previously did something quite similar when they abruptly launched their “Site Finder” service which (more…)
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I recently discovered something interesting about my company, Verizon.
Do you remember the old Oliver Stone tv mini-series from the early 90s called “Wild Palms”? It was about a dystopian future of America where a fascist political group has risen to power, headed up by a senator who founded a new philosophy called “Synthiotics” or “New Realism”, which apparently involves the next stage of human evolution and virtual reality (VR).
The Senator, named Anton Kreutzer, owns a company named Mimecom which has developed some sort of advanced VR technology and 3-d display technology which they are about to deploy out to households through a television company, called Channel 3, in a new drama series they’ve named “Church Windows”. They seemed to be using Church Windows as a platform for propagandizing Synthiotic tenets, as well. The Senator is seeking one last piece of technology from Japan, a “Go Chip”, which will essentially give him eternal life, and seal up his political power. The Go Chip is named after the game of Go, an ancient Chinese strategy game that has been used by artificial intelligence researchers as a test case for building systems which can learn and immitate human intelligence (though, they don’t really spell out that AI tie-in during the series).
The Wild Palms series was likely intended to be a very cutting-edge, conceptual story that was inspired in large part by the cyberpunk movement in science fiction. One of the prime “founders” of the cyberpunk movement, the author William Gibson, actually puts in a cameo appearance in the series, as well. Oliver Stone likely intended the story to use semiotic literary devices as well, since many of the plot items and names seemed to be intended to have multiple layers of meanings.
Here’s where fiction begins to turn into reality. MimEcom was the name of an actual ecommerce/hosting/technology firm that was later started up in San Francisco, and considered IPOing in 2000, though the dot-bombs happened, and it halted plans to go public.
Later, MimEcom changed their company name to “Totality”.
In about 2005, Totality was acquired by MCI. MCI was merged into Verizon later on in 2005. The Totality part was folded under the Verizon Business division of the company. (more…)
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Filed under: Futurism, General ai, artificial-intelligence, cyberpunk, future, Futurism, Go-Game, Google, MCI, Mimecom, science-fiction, search-engines, search-pets, semiotics, technology, Verizon, virtual-reality, Wild-Palms, William-Gibson