Plus: Former Qwest chairman charged with fraud; bill could give phishers jail time; Martin named as new FCC chair; Semiconductor makers warn US going soft.
Qwest has increased its offer to acquire MCI, in an attempt to derail last month’s merger agreement between MCI and Verizon. Qwest now is offering to pay about $26 in cash and stock for each share of MCI, up from its previous offer of $24.60 per share.
MCI’s board will review the new proposal and respond by the close of business on March 28, it said in a statement. Verizon announced Feb. 14 that it had hammered out an agreement to buy MCI in a deal valued at $6.7 billion. Soon after that deal was announced, Qwest said that it would revise its previous offer. Now MCI has received a revised offer from Qwest of $10.50 in cash and $15.50 in Qwest shares for each share of MCI. The Jan. 31 announcement that SBC plans to acquire AT&T in a deal worth $16 billion triggered the latest round of merger activity among telecom companies.
After a series of legal actions against former executives of Qwest for alleged financial fraud, the Securities and Exchange Commission finally worked its way to the top of the executive ladder. It charged former Qwest CEO and Co-Chairman Joseph Nacchio last week with fraud and other securities-law violations.
The SEC charges against Nacchio came within hours of a jury convicting another high-profile ex-CEO defendant, WorldCom’s Bernard Ebbers, on all charges leveled against him in connection with WorldCom’s $11 billion accounting fraud. The SEC’s charges are civil, not criminal, but the agency generally conducts its investigations in tandem with the Department of Justice, which has the authority to bring criminal charges. From 1999 to 2002, Qwest engaged in a complex scheme to improperly record more than $3 billion in revenue and exclude $17.3 million in expenses, according to the SEC. Nacchio’s attorney, Charles Stillman, said Nacchio cooperated with the SEC’s investigation and that he maintains his innocence.
Sen. Patrick Leahy (D-Vt.) recently introduced a bill to the Senate that attaches fines and prison sentences to scammers caught phishing.
The Anti-Phishing Act of 2005, which is similar to the bill Leahy introduced in 2004 that never came up for a vote, slaps phishers with up to five years in prison and fines as high as $250,000. In addition to outlawing phishing, where scammers send e-mails designed to extract personal or financial information from recipients, the 2005 version of the bill also covers pharming. That practice redirects a PC user’s browser to a fraudulent Web site asking for sensitive information. While last year’s bill was introduced mainly to raise awareness of these scams, a spokesman for Leahy said the senator hopes the 2005 version will pass “sooner rather than later.”
President Bush last week named FCC Commissioner Kevin Martin to replace outgoing Chairman Michael Powell as head of the regulatory body. Martin, a member of the FCC since 2001, also served as a special assistant to Bush and was a lawyer with the Bush 2000 campaign.
Martin’s appointment was largely lauded by the telecom industry. Announcements regarding a commissioner replacement for Martin have not been made. While Bush’s appointment of Martin to the head of the FCC doesn’t need approval, the White House’s candidate for commissioner will require a nod from the Senate before being installed.
The U.S. is in danger of losing its technological edge unless its government increases funding for R&D and reforms the nation’s education system, members of the Semiconductor Industry Association said last week. SIA members, including Intel CEO Craig Barrett, called for a yearly 7% increase in the National Science Foundation’s research budget, and increases in federal funding of microelectronics and nanomanufacturing programs.
They also called for a math and science program in the No Child Left Behind Act. Without a renewed national focus on R&D and education, the semiconductor industry could run into technology and economic roadblocks by 2020, SIA members said at a press conference. Barrett called R&D spending and educated workers the foundations for innovation and creativity in the U.S. But federal government spending on R&D – which funds university-based research in the U.S. – has been flat for about 25 years, SIA members said. The U.S. ranks near the bottom of industrialized nations in science and math education, based on test scores, and the number of U.S. residents applying for doctorate-level degrees is shrinking, Barrett said.
“From a people standpoint, we’re not doing a particularly good job,” Barrett said. “I don’t have particular concerns in the near term about our industry, but I have great concerns about our industry 10 to 15 to 20 years out.”
