Area workers remain bitter
Qwest employees saw savings ruined
By Leslie Brooks Suzukamo
St Paul Pioneer Press
Wednesday, March 16, 2005
Mary Ann Neuman's reaction was immediate and heartfelt when she heard that the U.S. Securities and Exchange Commission had filed fraud charges Tuesday against former Qwest Communications International chief executive Joseph Nacchio and six of his ex-lieutenants.
"There is a God!" the 59-year-old Qwest retiree from New Hope said.
As she heard the names of the former Qwest officials who were charged, including former Chief Operating Officer Afshin Mohebbi, Neuman said, "Oh good, they're getting all his cronies."
"He just raped and pillaged the company," Neuman said. "You just felt violated."
The depth of Neuman's anger against Nacchio may seem unusual, but in Minnesota, where 4,600 people still work for Qwest, many past and present employees are still boiling mad at their former boss.
In their eyes, Nacchio dismantled a once great company and put their jobs and retirements in jeopardy. Qwest, in part because of actions under Nacchio's tenure, skirted bankruptcy a couple years ago and is still hobbled by more than $17 billion in debt.
Qwest's weak finances are hurting its present struggle to woo long-distance giant MCI away from the much larger Verizon Communications. Qwest is offering $8 billion in stock and cash for MCI, but the MCI board hasn't budged from its deal to be acquired by Verizon for $6.75 billion, saying Verizon is stronger financially than Qwest and presents a better long-term partner.
Qwest management would not comment on the charges except to say that the charges related to events from "many years ago" and "The company is focused on the future." Back in 2000, Nacchio and his executive team swooped into Qwest's headquarters in Denver and swore to transform the smallest of the nation's four Baby Bell telephone companies into a 21st century powerhouse using fiber-optic technology. Employees said he was arrogant, aloof and unreasonable, someone who out of hand dismissed advice from phone-company veterans.
For a time, the stock soared, but when the telecommunications bubble burst in 2001, Qwest plunged in value, taking down with it the personal retirement accounts of thousands of Qwest workers and retirees who owned the stock, said Tim Lovaasen, president of the state Communications Workers of America Council.
Qwest, and predecessors U S West and Northwestern Bell before it, had matched employee contributions to personal retirement accounts using company stock. The stock's share price soared in the late 1990s into the low $70s, but after the merger, Qwest's stock dropped to under $2. It now trades at under $5 a share.
"They saw their savings completely annihilated," Lovaasen said.
Neuman is one of those people hurt by the company's change in fortune. When Qwest's stock price peaked after the merger at about $51 a share, her portfolio was worth more than $220,000. At Tuesday's closing price, it was worth less than $17,000.
The difference is more than $200,000.
"That's what Joe owes me," she said.
Leslie Brooks Suzukamo covers telecommunications and technology and can be reached at email@example.com or 651-228-5475.