Verizon Blasts Qwest

That said, some large MCI shareholders have balked at the Verizon price and urged MCI to reconsider a merger with Qwest, even though breaking up the Verizon deal would cost MCI $200 million and stick it with a lower-quality competitor.

Earlier in March, Qwest set off a rally in its stock by promising the mass firings should it complete the MCI deal. But those gains have since dissipated.

On Wednesday, Qwest slipped 9 cents to $3.77, Verizon dropped 38 cents to $35.30 and MCI lost 28 cents to $23.75.

What seems likely at this point, according to industry watchers and investors, is that Verizon may come back with a slightly higher offer than its original bid. The MCI board has been hotly criticized for accepting a lower offer from Verizon. The board clearly prefers a future with Verizon, but shareholder complaints have them on the hook.

"I think if Verizon bumped up its bid a little, the board could justify [its] decision," says the hedge fund manager.

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