Monday Business Roundup
Nacchio Reflects, Regrets
By Richard Martin, 4-23-07
As he awaits his July 27 sentencing on a felony insider-trading conviction, Joe Nacchio has a lot to think about, including a likely 10-year jail term. And he has a lot to regret.
First, he must have had second thoughts about his defense strategy, which initially consisted of a “black-box” argument centering on purported Defense Dept. contracts that Nacchio claimed would turn around Qwest’s deteriorating financial condition – and that only he was privy to. That defense was effectively rendered a non-starter when the judge barred the release of reams of classified material. Nacchio’s lawyers ended up calling only three witnesses for the defense.
Despite saying, near the end of the case, “I love my defense lawyers,” Nacchio also likely rues his choice of attorney. Herbert Stern, 70, stumbled through rambling opening and closing statements and often seemed unprepared, according to many courtroom observers including the Post’s David Milstead.
Also regrettable from Nacchio’s point of view was the timing of his case. The former Qwest CEO’s trial closes a cycle of corporate-malfeasance cases including executives from Tyco, WorldCom, and Enron, and federal prosecutors have honed their tactics – “successfully using a less-complicated strategy: Executives lied to investors and profited from it,´as AP writer Sandy Shore put it.
Whether Nacchio regrets his actual crime – of lying to investors and analysts about Qwest’s true business prospects while selling off millions of dollars of stock – is anybody’s guess.
Fed tactics
In other business news: Colorado stocks climb sharply as Dow nears 13,000; First Data Corp. sees big profit slump; and Gov. Ritter tries to avoid a school-funding crisis.
In other business news:
-- Having recovered from the telecom bust of the early 2000s, Nacchio’s former company Qwest is among a group of Colorado companies whose share prices are climbing sharply. The Bloomberg index of public companies based in Colorado hit a record high last week as the Dow, bolstered by a wave of unexpectedly strong earnings reports, rose toward 13,000.
-- Doing less well is First Data Corp., which saw its profit fall 59 percent in its most recent quarter. The Greenwood Village-based credit-card processor, which agreed earlier this month to a $27 billion buyout by private-equity firm Kohlberg Kravitz Roberts & Co., blamed to income fall-off to its spinoff last fall of Western Union.
-- Gov. Bill Ritter’s plan to make Colorado a center of the new high-tech economy won’t go far if the state can’t fund its public school system, which is why Ritter has proposed freezing property tax rates to stabilize the education budget. Avoiding property-tax cuts scheduled for 2008 would effectively increase school funding by about $55 million per year. Republican lawmakers predictably oppose the idea.
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