The following is all based on my opinion only, and should be considered purely as my speculation; it should not be taken as a recommendation to actually buy or sell any stock. In a call for comments on Om Malik's site, here is the following:
Qwest will never win its bid for MCI.
Qwest has too much debt, it probably still is trying to make sense of its US West merger, and Verizon is by far the stronger company in terms of strategic positioning and financial stability. Verizon will raise its bid, if it has to, and move on. MCI will never pair with a weak partner and see its shareholder value desolve. Qwest could eventually restructure or be acquired by a foreign telecom company with a strong balance sheet.
Update: Removed paragraph that was based on after hours stock price information.
Separately, if I were a practicing sell side analyst I would now tell my associates to: 1) write me a detailed note flushing out all I have just stated; 2) add details about the terms of the deal; 3) add an explaination of Verizon's like response (raise its bid slightly, more cash up front); 4) remodel the capital structure of a combined Qwest/MCI at the new offer and Verizon/MCI at a higher offer"; 5) call the London office and ask them if they can think of anyone that would want to acquire Qwest; 6) tell another associate to inform compliance to get ready to review a blast email and voice alerts; 7) send out blast email alert; 8) get on the phone to call my traders and sales people; and then 9) and start calling all my most important clients first, to tell them "No, the deal will not go through."
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