April 2005 Archives

New Zealand Telecom Sold

April 29, 2005 3:39 PM | 1 Comment

It can be fairly argued that we cover New Zealand news a bit closer because a) this reporter's wife is a Kiwi, and b) it's the most beautiful place on earth, but beside all that, New Zealand's telecom industry is one of the most robust on earth:

Telecom Corp. of New Zealand, whose dividend yield is twice that of Verizon Communications Inc., agreed to sell a media investment to Rupert Murdoch's News Corp., boosting its ability to increase payments to shareholders.

New Zealand's largest telephone company plans to sell its 12 percent stake in Independent Newspapers Ltd., a cashed-up former publisher, to News Corp. for NZ$6.19 a share, or NZ$272 million (US$198 million), Telecom said in a statement in Wellington today.

Telecom raised dividend payments this year to 85 percent of earnings from as little as 50 percent after the company slashed debt it had used to expand the past three years. Telecom, whose stock has an indicated gross yield of 8.9 percent, has said it may pay special dividends should it have excess cash.

"They have got reasonable capacity to pay some sort of increased distribution and this helps,” said Jeremy Simpson, an analyst at Forsyth Barr in Auckland, who rates Telecom a “buy.” The brokerage is New Zealand's largest for private clients.
Shares of Telecom rose 0.8 percent to NZ$6.06 at the 5 p.m. market close in Wellington. The stock's 1.5 percent decline this year lags a 2.7 percent drop in the benchmark NZSX 50 Index. Of 12 analysts who follow the stock, eight rate the stock a ``Buy'' and four a “Hol."

Chief Executive Theresa Gattung, 43, whom Fortune magazine ranked the 32nd most powerful woman in business outside the U.S. in 2004, said a year ago that the company may consider special dividends. The sale of the Independent Newspapers stake will reap a profit of NZ$86 million, the company said today.

Got an e-mail from yet another erstwhile customer of Caiman.com, the online secondhand and used CD company infamous for their terrible service and rudeness.

No need to identify her, but it's the same old screw-the-customer attitude Caiman.com's famous for:

"Dear David,

"I found an article of yours while trying to find some information on Caiman.com… a company who has jerked me around for the past week.

"If it helps you and your readers, I have obtained some further contact information for them from the Better Business Bureau:

"Local Phone Number: (305) 262-4973 Fax Number: (305) 468-3892 Membership Status: This company is not a member. TOB Classification: Internet Shopping Services.

"It should be noted that, while I eventually got through, they were extremely unhelpful and border-line rude... there was a terribly long wait before I was treated rather shabbily by their ‘Customer Service’ representative."

The Associated Press is reporting that Verizon Communications Inc. is turning off the free wireless Internet access it beams from New York City telephone booths for DSL subscribers who use laptops away from home or the office.

The company revealed the decision on Wednesday as its Verizon Wireless unit announced plans to accelerate the deployment of a fee-based cellular Internet service in the New York area.

The free service, which will be phased out over the next two months, was provided by installing short-range Wi-Fi transmitters in hundreds of telephone booths starting in May 2003.

Back then, Wi-Fi was exploding in popularity and Verizon was trying to jump-start its DSL business in a bid to catch up with rival providers of high-speed broadband service, particularly cable TV companies.

The realization that phone booths might serve as valuable real estate for providing wireless Internet service came at a time when Verizon and other Bell companies were cutting back sharply on public phones because a growing number of people were using cell phones to make calls from public places.

But with Verizon Wireless spending billions to upgrade its cell network for speedier Internet connections costing up to $80 per month, the company has decided the time has come to pull the plug on the free Wi-Fi network.

The company, which owns Verizon Wireless in partnership with Britain's Vodafone Group PLC, has spent $138 million so far this year upgrading its cellular network in the New York metropolitan area after a $475 million investment in 2004.

Verizon said the service, based on a technology called EV-DO, offers far wider coverage and seamless connectivity for roaming laptop users. A Wi-Fi signal, though usually several times speedier than the cellular Internet service, can only travel several hundred feet.

There are currently about 380 Wi-Fi hot spots providing the free service from Verizon phone booths, nearly all of them in Manhattan with a few in Brooklyn. The first to be turned off will be those that are least used, spokeswoman Bobbi Henson said Thursday.

Although the hot spots are not expensive to operate, Verizon no longer views the service as an attractive from a business perspective.

"The usage level, as other alternatives have become available is not enough to justify continuing it when there are other options. A lot has changed over the past two years in terms of wireless access," said Henson. "Everybody's trying to look for a business model around (Wi-Fi).... But the better business model in our mind is the EV-DO network."

RoboServer Systems Corp., developer of the self-serve system that enables quick-service restaurant customers to process their own orders on a touch-screen kiosk, is targeting installations with numerous franchised restaurants of six of the top 15 quick-service restaurant chains.

RoboServer's kiosk-like Self-Serve System is similar to an ATM machine or self-checkout stand found in grocery stores -- but its proprietary software systems are designed specifically for self-ordering at fast-food and quick-serve restaurants. Customers can process their own orders by selecting a few buttons on the touch-screen, pay for their order with the machine's bill acceptor or credit card processor, and pick up their order at the counter. Industry estimates show that self-serve technologies can cut customer waiting time by as much as 33%.
For competitive reasons, the names of the six chains were not disclosed, but more information on the Top 50 chains is available at QSR Magazine.

"The franchisees we're dealing with are very anxious to bring our technology to these leading restaurants, and we're working towards beginning pilot tests for some of those franchised locations," noted Delmar Janovec, RoboServer's CEO.

One can, of course, imagine the jokes: “Merrilee, you screw up another order of pollo con queso we’re gonna replace you with one of those RoboServers.”

“Yeah, see how that looks in this uniform. If it malfunctions we can just call it RoboManager, huh?”

Word is the company's working on a special casing for the test runs at Hooters.

Qwest-Verizon-MCI Primer

April 28, 2005 9:06 AM | 0 Comments

This reporter’s been covering the Qwest-MCI-Verizon saga for months now. It can get pretty complicated, but USA Today has printed an excellent Q&A on the basics:

For two months, Qwest has been in relentless pursuit of MCI, hoping to break up Verizon's own deal to acquire MCI.

MCI's board has declared Qwest's latest bid for MCI of $30 a share to be "superior" to Verizon's $23.10 bid. Verizon has until May 3 to raise its offer.

USA TODAY reporter Leslie Cauley explains the tug of war.

Why is Qwest so intent on grabbing MCI for itself?

Qwest, in a word, is desperate. The company, with one of the worst financial profiles in telecom, is eager for a new business strategy. It has a relatively meager $14.8 billion in annual revenue and a gut-busting $17.5 billion in debt. Qwest had originally hoped to buy MCI, in part, to gain access to MCI's $5.5 billion cash hoard. Qwest hoped to use that to help pay off its debt.

Is that still the case?

Not really. Qwest has steadily raised its bid, and each time it has boosted the cash component of its offer. A lot of that cash is coming directly out of MCI's own reserves. According to calculations by Robert Rock, a telecom analyst at John Hancock Advisors, Qwest's latest offer of $30 a share could eat up all but about $58 million of MCI's $5.5 billion in cash. That's not to say Qwest would be cash-poor. Once the transaction closes, Rock says, Qwest would have about $3 billion in cash on hand. That figure includes an infusion of $800 million from unnamed outside investors.

And what about Verizon?

Verizon's financials are rock solid. It's the USA's biggest telecommunications company, with more than $70 billion in annual revenue and a market value of more than $100 billion. It's also the controlling partner in Verizon Wireless, the No. 2 wireless company. Verizon's muscle is a big reason MCI's board had backed a deal with Verizon, even though it was - and still is - offering less upfront value than Qwest.

Why is MCI so enticing as a takeover target?

MCI's real plum is its "enterprise" business - its big corporate and government customers. This lucrative base is exceedingly loyal to MCI. Most of these customers stayed put even when MCI - then known as WorldCom - was in bankruptcy protection.

When's this bidding war going to end?

Unclear. Technically, Verizon has until May 3 to raise its bid. Even if it declines to do so, it has the right to force an MCI shareholder vote on its latest offer. And if Verizon decided to walk away from its merger deal, MCI would be obliged to pay Verizon a $240 million breakup fee. A more probable outcome: Verizon raises its current bid.

Why is Verizon paying one MCI shareholder - Carlos Slim Helu - more than it has offered other shareholders?

The Slim deal, for Verizon, was tactical. Since Feb. 14, MCI's big investors were clamoring for Verizon to pay "more." In giving Slim $25.72 apiece for his 43.4 million shares, Verizon was telegraphing to the market the highest price it was willing to pay for MCI.

The gambit may have worked. Since the Slim deal was announced, MCI's other big investors have been pushing Verizon to pay them as much as - but no more than - it's giving Slim.

What's all this mean for consumers?

Not much, at least in the short term. MCI, like AT&T, stopped marketing its long-distance services to the residential market last year. Since then, the carrier has focused on business customers. Once MCI is merged with Verizon or Qwest, that focus is likely to continue.

MCI's Price Goes Up.

April 23, 2005 8:53 PM | 0 Comments

Looks like Qwest's hyperdesperate efforts to acquire MCI are going to cost Verizon a bit more cash when they finally get it.

The fight to take over MCI Inc. intensified on Saturday after the long-distance firm's board said that Qwest Communications International's recently revised $9.7 billion bid is superior to its acquisition agreement with Verizon Communications.

The bid by Qwest, worth $30 a share, sends Verizon back to the drawing board if it wants to hold onto MCI with its $7.6 billion agreement, worth $23.10 a share.

Qwest on Thursday said it was making its "best and final" offer for MC.

In a statement, MCI said Saturday that Verizon has five business days until April 29, to respond with a revised proposal.

During this time, Ashburn, Va.-based MCI added that it will continue to recommend its agreement with Verizon.

A call to a Verizon spokesman wasn't immediately returned. The company asserted Thursday following Qwest's latest bid that it still believes it's the best merger partner for MCI.

MCI has twice before rejected bids by the Denver-based regional phone company in favor of offers from Verizon, seeing the latter as a more attractive partner.

I’ve excerpted this e-mail on the Friday mailbags, here’s the whole thing. Readers like Mr. Davis are one of the upsides of this columnist gig, his perspective on the cost of doing business of unsolicited e-mails and faxes, not only in time and aggravation but the accompanying cost in quality of customer service, is provocative.

Hello David:

I really enjoyed your article...

I personally feel that this sort of issue is a difficult thing to deal with but would love to see the unsolicited FAX and call scenario go away.

I am a "small business owner" in Palm Springs, CA, and I find that both are real drains on resources for a small company. I must get 250 unsolicited FAXes a week; no way to determine how many unsolicited sales calls. I have always hated having to talk to an unattended answering system but in all honesty, it does eliminate much of the unsolicited calling.

While I would far rather have a live person answering my phones, I have given in and moved in that direction instead of having a pleasant, reasonably intelligent human being answer the phone just because of the quantity of unsolicited calls. I feel I have tried everything I can legally try to get by them. It costs me about 6 employee hours a week to "try to get off" the FAX lists, by calling the remove numbers, not to mention the toner, ink and paper.

All of us that have ever depended on FAX machines for business have tried the FAX servers but that technology has a substantial cost to it as well, and has never been very reliable.

The current laws are a joke and have no teeth whatsoever. This [proposed law outlawing all unsolicited faxes] would be a wonderful change but all the laws on the books really mean nothing until something is done to enforce them.

E-Mail is in worse shape as it is the new means of business communication. Up until about 2002, we used to get about 700 FAXes a week that were legitimate forms of communication. Now, I get about 50 legitimate and 250 illegitimate. It is hardly worth the effort and expense of a dedicated FAX line and all that goes with it. FAXes will soon go away altogether.

If the spoofing and spamming in E-Mail does not cease soon, the usefulness of E-Mail, as we know it now, will be questionable. I again must pay someone at least minimum wage for 2 to 3 hours a day to deal with all the junk that slips into our system, AFTER it has been filtered and computer handled. It seems that it should be easy for the government to control this but politics being what it is, seems to only cloud the water. Perhaps you will be able to research and do an article on finding and intelligent way to handle the E-Mail problems.

I own a small computer and computer service business. It is a family owned business and we have been here for 30 years. We do mostly repairs, custom installations, networking, support, custom equipment and some sales.

One of the negative factors of all of this is that by having to compromise on something as simple as answering a phone, often confusion and uncertainty causes problems, for both the business and for the customer.

Not being able to just simply communicate is a real negative in the business world where customer contact is imperative. Even cell phones now are subject to mass solicitation. It seems that would be easy to control but the communications industry looks the other way and asks the government to do the same. Most of the time, they do.

However, a business must draw the line somewhere and try to work within the boundaries made since we can expect no assistance from the goverment. Where 2 or 3 out of every 5 calls to a business is a solicitation, productivity of employees grinds down.

The same is true for E-Mail. Our guess is that 25 out of every 30 into our domain are junk. At best we electronically stop 13 or 14 out of 30. The rest must be handled or take the chance of an important loss or answer being tossed. It does not make sense that 99.9% of the businesses in the US must pay for junk E-Mailers to operate within the US. And my best information is that the US is only a small fraction of the source for junk and spam worldwide.

It is a sad commentary to say that about a third of the IT budget, small companies or large, is spent fighting and avoiding outside, uninvited intrusion such as FAXes, phone calls, spam, junk mail ad E-Mail, adware and spyware, and viruses. Think how efficient data processing, not to mention businesses in general, could be without all that nonsense.

I have been in the computer industry since cutting my teeth on IBM 360s, Data General Novas and DEC octal machines in the early 60s. There have been good companies and those that were not so good. Others, such as IBM and Microsoft have had a significant impact on our world, not just the computer industry. Microsoft is obviously huge and huge companies are ALWAYS the targets of bashing. They don't do any more for me than they do for anyone else in the industry but it really bothers me to see all of the bashing of Microsoft.

We would have no industry without them! They didn't cause the problems, certainly not these though they are tried and convicted of it daily; and as I see it, they are no more "unfair" in business ethics than most businesses in all other industries. They have provided a very good product in the industry for a very reasonable end user price. I paid $10,000 for my first Nova OS, XP Pro is $300 45 years later. Considering inflation over the years, it is practically a gift!

Although the computer industry has continued to advance technology and lower prices, that cannot continue if this nonsense of the government avoiding the responsibility of "doing the right thing" when it comes to controlling abusers of the communications in the country fails to change.

Is it a small problem? Yes and no. It is a small segment of the business world but in dollars, it is huge and it is THE eroding factor for what is right and wrong in business in general. It seems to me that 50 years ago, ethics mattered and doing "wrong" was a rarity. Now much of business as a whole is based on intentionally skirting the issues and riding a very fine line between right and wrong.

The communications industry SHOULD be the ones policing themselves; the computer industry should do the same. Instead both are leeches on all of businesses that MUST use them.

Sorry about unloading but this is an UGLY aspect of business. Good luck and thanks again for the article.

Today In CRM History:

April 18, 2005 10:17 AM | 0 Comments

Okay, what’s today’s important date in customer relationship history? Multiple guess:

  1. In 1775, Paul Revere took his legendary midnight ride to warn “The British are coming! The British are coming!”
  1. In 1857 famous lawyer Clarence Darrow, who lost the Scopes Monkey Trial, was born in Kinsman, Ohio
  1. In 1906 an earthquake in San Francisco killed 500 people and destroyed 3,000 acres in the heart of the city.
  1. In 1918 Clifton Keith Hillegass was born in Rising City, Nebraska. You know him as the founder of Cliff’s Notes.
  1. In 1923 Yankee Stadium opened with an attendance of 74,200 before the fire marshal ordered the gates closed. The Bronx Bombers beat the Boston Red Sox with a three-run Babe Ruth homer. Later, of course, the Yankees would go on to become the first team in baseball history to choke a 3-0 lead in a postseason series and blow the American League Championship Series to the Red Sox.

All key events in American history, no doubt, but for our purposes the significance of today is that in 1934, in Fort Worth, Texas, J.F. Cantrell opened the first laundromat, the Washateria, for people who couldn’t afford washing machines or a laundry. He had four electric washing machines and charged by the hour.

This is, of course, the essence of all great customer relationship management: Find out what the customers want, think outside the box, and provide it for them. Do it the right way, like St. Cantrell did, and you’ll please and delight the customer to no end.

laundromat 2.jpg

Bumblin' and Fumblin' With Qwest

April 15, 2005 12:33 PM | 0 Comments
Floyd Norris of the New York Times offers his take on why, even at the lower price, Verizon is still the better option for MCI than Qwest, which is punching far above its weight class:

MAJOR institutional investors are up in arms over the way MCI has conducted itself in finding a buyer. Its board so far has backed the lower bid from the company that can best afford it, Verizon, rather than the higher bid from Qwest, a company that is, to put it gently, financially challenged.

"The question is not whether Verizon is a larger, more financially sound company that possesses assets, such as wireless, that Qwest lacks," Bill Miller, the chief investment officer at Legg Mason, wrote in an angry letter to MCI. "It is and it does. The question is which transaction creates the most value for MCI owners."

To Mr. Miller, who owns substantial stakes in both MCI and Qwest, the answer is clear. But perhaps it is not quite as obvious as the numbers would seem to suggest.

The reason is that both the Verizon and Qwest offers include common stock. And there are historical reasons to question whether Qwest shares will prosper.

Such a takeover would be unusual in a couple of ways. First, Qwest trades for less than $4 a share, far below the ordinary price for an acquirer. Second, its total stock market capitalization, around $7 billion, is less than the $8.9 billion in stock and cash it is offering for MCI.

I asked Rene M. Stulz, an Ohio State professor who has done extensive work on mergers, to check how deals with that combination have done in the past. He and his colleague, Sara B. Moeller of Southern Methodist University, found 49 such deals from 1980-2002. On average, over the next 400 trading days, about 19 months, acquirers underperformed the market as a whole by a stunning 56 percent. "Acquirers have poor returns after the acquisition," he said, "but the ones like Qwest appear to perform twice as poorly as the average acquirer."

Why should that be? First, no respectable company wants a share price under $5, and those that have one usually have suffered problems and are hesitant to get the price up with a reverse split, since values often fall after such a split.

If such a company instead seeks to buy a larger company when its own share price is in the dumps, that may be a sign of desperation. Ms. Moeller reports that companies that try such takeovers but fail to complete them do a little worse than those that do complete them.

It is not hard to understand why Qwest, the result of one of the worst mergers of recent years, would feel a need to roll the dice. Nor is it hard to understand why MCI's board would be a little gun-shy about merging with a company with a history of phony accounting, even if it does have a new management. This board presided over WorldCom's bankruptcy, after which it was renamed MCI. Old WorldCom shareholders got nothing.

That Qwest can borrow cash to partly finance this transaction is a testament to just how easy credit is now. But the fact a highly leveraged company can borrow more does not prove it is a good idea to do so.

Many MCI holders will take the cash and run, and could not care less what happens thereafter. Some even prefer Qwest because it is easier to hedge the value of a stock that does not pay a dividend - like Qwest - than one that pays a good one, like Verizon.

That is not a long-term view, and MCI's board could set it aside. But it is offensive for Verizon to pay one shareholder more than others, as it now wants to do. And there are limits to the quality premium Verizon deserves. Leon Cooperman, whose hedge fund has a large MCI position, says it might be reasonable to prefer Verizon if the figures were close - "a few percent discount at most."

MCI as a company, and its employees, would probably do better with Verizon. But Verizon may have to be nicer to MCI shareholders for that to happen.

Happy Birthday McDonald's!

April 14, 2005 7:59 PM | 0 Comments
Say what you will about their food, McDonald's, 50 years old today, is one of the greatest customer service organizations the world will ever see.

If you look closely, according to my mom, you'll probably be able to see her on a date with Dad in the window. According to Mom this McDonald's, the first one in Des Plaines, Illinois, near their college in Wheaton, was the only place Dad ever took her on dates. "It was new, it was a novelty," Dad said.

"It was cheap," Mom said.

Must. Have. That. Red. Car.

McD.jpg

Protectionism's Historical Cost

April 14, 2005 1:21 PM | 0 Comments

As Congress decides what it wants to do about the telecom industry, we here at Telecom and CRM Blog warn them not to protect obsolete industries out of short-term thinking.

James Carlini’s great article on the historical dangers of protecting obsolete industries gives a sobering lesson from history:

"Restricting options and closing down innovation in order to protect obsolete infrastructures and business models is as dangerous as demanding rickety bridges to be kept open because of their quaint reflection of the past.

"A better comparison (and one that really happened) is the last big infrastructure issue facing Chicago and St. Louis back in the late 1800s after the Civil War. See below:

Gateway.jpg

 

"At that time, Illinois and Chicago were open to innovation and welcomed the railroad growth. St. Louis put legislative obstacles in the way in order to stifle progress and protect the waterway businesses. It was bad government decisions and protectionism at their worst. St. Louis could have easily become the national hub instead of Chicago.

"As they say, the rest is history. Chicago became the Midwest powerhouse in economic development fueled by the new railroad infrastructure and grew in population while St. Louis fell into tertiary status because its growth was stagnated by shortsighted politicians."

Read and heed.

 

Still testing...

April 14, 2005 12:18 PM | 0 Comments


We'll get around to telecoms, CRM, VoIP and why this reporter doesn't have it on his computer yet, and why some guy named Slim was holding 13.7% of MCI stock, but we're still noodling around, playing and figuring out how this thing works (your reporter is not the most technically proficient business writer alive). Let's see if this works:


It was on this day in 1828 that Noah Webster published
his American Dictionary of the English Language
. He was a man who'd
grown up in America at a time when Americans from different states could barely
understand each other, because they spoke with such different accents and even
different languages. Americans in Vermont spoke French, New Yorkers spoke Dutch,
and the settlers in Pennsylvania spoke German. All these different languages
were influencing American English, and there were no standards of spelling or
meaning.


Webster knew from European history that linguistic differences
could deeply divide a nation, so he decided that in order to pull the young
United States together, there needed to be a common language, and he would
devote his life to capturing that language.


He spent 20 years working on his dictionary, which contained
70,000 words, and he did all the research and the handwriting of the book by
himself. He is believed to be the last lexicographer to complete a dictionary
without any assistance.


Instead of using quotations from literature to show words in
context, he wrote his own sentences as examples. For the verb "to love" he
wrote, "The Christian loves his Bible." For the word "inestimable" he wrote,
"The privileges of American citizens, civil and religious, are inestimable." For
the word "indulgence," he wrote, "How many children are ruined by
indulgence!"

Webster's dictionary had the result he intended. His standardized
spelling and pronunciation guides helped ensure that Americans who speak English
speak more or less the same English. America has the fewest dialects of any
major country in history.



In order to write properly about telecom issues, CRM and Qwest's unending folly you need the appropriate music in the background, such as:

Harper Album.jpg


Ever been to the Hofbrauhaus in Munich? Great place.

The journalist is on the left. The man on the right can be identified by watching Episode #46, "Motorcyle Apaches," of the popular 1960s TV show Speed Racer.

Hofbrauhaus 3.jpg

Testing, one, two, three...

April 13, 2005 12:51 PM | 0 Comments


Testing, testing... [obnoxious tapping of microphone] Hey, is this thing on? Hey... HEY... I have outlawed the Soviet Union, we will commence bombing in five minutes...

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