I was watching the evening news last night, and a Qwest retiree was heralding the news that Ralph Nacchio, the ex-CEO of Qwest, was indicted for insider trading. This person lost all their retirement savings, much the same way folks at Enron had. I felt sorry for them for two reasons – first, that they had to worry about money during what should be fun times with the grandkids and such, and second because they (and many others) still don’t realize that the fat retirement plan they had in the 90’s was never meant to be in the first place.
The press would like to paint the picture that the evil-doers are now going to pay their dues, and everything will be rosy forthwith. Sorry, but $100 million restitution is not going to bring back much to a company whose market capitalization went from roughly $75 billion to less than $11 billion in a few short years. Even if the Feds went after the bankers that backed Qwest’s $17+ billion in debt offerings, and got every dime of that back into the hands of shareholders somehow, it still wouldn’t bring back the “golden years.”
To do that, tough decisions need to be made. Politically incorrect, scorched earth decisions. Decisions beyond de-emphasizing marketing expenditures for marginal bundles of products which have only limited legs, in return for research and development dollars that do. Beyond just shuffling the workforce in preparation for the future. Not doing what everyone else is doing – piling on more of the same.
I am talking a combination of those things, and maybe even handing the company over to the bondholders – they have a bigger stake in it than shareholders do right now anyway, and the market has already taken that into account.
Note: I am neither a shareholder or bondholder of Qwest, nor will I be in the future.