Verizon Blasts Qwest

Updated from 11:47 a.m.

As Qwest (Q) prepares to outbid itself again, Verizon (VZ) CEO Ivan Seidenberg issued a scathing critique of the company's pursuit of MCI (MCIP).

Earning his Wall Street nickname "Ivan the Terrible," Seidenberg calls Qwest a dead-end telco so driven to merge that it has stooped to making bogus projections. For seven pages he attacks Qwest's finances, its business outlook and its synergy claims, which "do not pass a common sense test," according to the letter.

"No wonder there appears to be a desperate quality to Qwest's efforts to acquire MCI," Seidenberg writes in the letter, filed Wednesday with the Securities and Exchange Commission. "Explaining in the future the failure to have delivered on exaggerated promises of synergies is understandably preferable to the stark reality of its current stand-alone financial prospects."

The move comes as Qwest is preparing to raise its stock-and-cash bid for MCI to about $26 a share from around $24.60, or $8 billion, according to media reports. Defending Qwest's plans, CEO Dick Notebaert fired back later Wednesday, saying that "historical commentaries serve no purpose as we look to the future of the communications sector and foster competition."

Continuing in that vein, Notebaert added, "The new company will be financially strong, with significant free cash flow, and offer investors a unique growth opportunity." The CEO made the remarks in a midday press release promising to "demonstrate our commitment to winning MCI."

Returning to the populist mode he has operated in for much of this battle, Notebaert added, "Let fairness, economics, and the best interests of shareholders decide this matter."

MCI agreed last month to merge with Verizon in a stock-and-cash deal valued at $20.75 a share, or $6.75 billion. It did so after rejecting multiple approaches from Qwest, arguing that the Denver telco isn't financially strong enough to make the combined company into a stout competitor in the cutthroat telecom business.

Seidenberg's broadside comes the day before a two-week negotiation period between MCI and Qwest is due to expire. Verizon, which put a noncompete clause in its agreement to buy MCI, earlier this month gave the sides time to talk in what it called an effort to clear the air.

Industry observers say reports that Qwest is preparing a higher offer suggests it has been told that its current bid isn't good enough. Also, investors and analysts say Qwest's chances aren't looking very good at this point, a notion reflected in the stock's 3% decline Wednesday.