Confessions of a Wall Street Analyst Part 11

"We'll just wait here on the line, Blair," I said. "Thanks."

Amazingly, Scott came on the line within five minutes.

"Hey, Dan, what's up?" Scott began nonchalantly. No matter what was going on, Scott was exactly the same. He spoke in a monotone, dressed and acted conservatively, and never appeared to get excited when the stock was soaring or distressed when it wasn't. He was as steady as Qwest's Joe Nacchio was volatile.

"Just trying to get a read on your outlook for revenues and struggling with Jack's banter that it's going to be lower than you've indicated," I said.

"What do you mean?" asked Scott.

"Come on, Scott," I said. "You know how this works. You, or perhaps Bernie, told the Salomon conference that you were antic.i.p.ating revenues to grow 13.515.5 percent this year. But then I'm hearing from some buy-siders that Jack cited a private conversation with you in which you endorsed the lower end of a 1315 percent range."

Scott denied it. "I haven't talked to him since his conference," he said.

"If you haven't talked to him," I said, "then you need to say that publicly. Right now, your largest holders are believing him, as he has quite a record of having far better information than the rest of us," I continued, and then added for effect, "Even those of us who have been bullish on your stock."

"I'm telling you now," Scott said, exasperated. "Why don't you pa.s.s this on to your clients?"

"It won't do much good, Scott. You have created your own monster here," I said, referring to Jack.

Scott denied it again.

Photographic Insert

Author as college student studying Middle East politics: Here shown touring ruins of Troy (Ephesus, Turkey), Summer 1973.

Our home and daughters in Potomac, MD, 1988: "Ed took one look at the house and almost started laughing. 'You ought to come to Wall Street and hit the big time,' he said."

Bert C. Roberts, Chairman and CEO of MCI Communications announcing MCI's merger with British Telecom, the largest cross-border merger ever at the time. The deal fell apart but Bernie Ebbers of WorldCom stepped in, taking over MCI and sealing Bert's and MCI's fate November 3, 1986. (AP/Wide World Photos)

Author (right) and Ed Greenberg, Morgan Stanley's telecom a.n.a.lyst, with chauffeur and Bentley hired by Morgan Stanley to shuttle us between meetings with European investors. November 1988. Six months later, Ed convinced me to take over his job at Morgan Stanley.(Jim Hayter)

Author (left), Dan Akerson, MCI's CFO (middle), and Jim Hayter, MCI's Director of Investor Relations, in Zurich, Switzerland, taking a break between meetings with Swiss inst.i.tutional investors. November 1988. (Jim Hayter) (Jim Hayter)

John Mack, President of Morgan Stanley, CEO of CSFB and now CEO of Morgan Stanley. "Sure John," I said. "How can I say no to an invitation from John Mack?" (AP/Wide World Photos) (AP/Wide World Photos)

Arthur Levitt, SEC Chairman 1993-2001. Levitt may have made speeches about a.n.a.lyst conflicts of interest but, on his watch, the SEC issued the "No Action Letter" that propelled a.n.a.lyst conflicts to new heights. (AP/Wide World Photos) (AP/Wide World Photos)

"The Siskel & Ebert of Telecom Investing." The New York Times New York Times Sunday Money & Business section featured a front page article contrasting Jack Grubman's and my styles and opinions. February 4, 1996. Sunday Money & Business section featured a front page article contrasting Jack Grubman's and my styles and opinions. February 4, 1996.(New York Times)

"Jack Grubman and Dan Reingold say they like each other. You'd never know it from the hand grenades they toss back and forth." ( (Mark Landler, New York Times) New York Times)

Evangelist for the Internet: Jim Crowe, CEO, Level 3 and (previously) CEO, Metropolitan Fiber Systems (MFS). Jim tried to turn me into an Internet believer but I just didn't "get it." (AP/Wide World Photos) (AP/Wide World Photos)

A savior's arrival? Mike Armstrong is welcomed by Bob Allen, AT&T's outgoing Chairman and CEO. October 20, 1997. savior's arrival? Mike Armstrong is welcomed by Bob Allen, AT&T's outgoing Chairman and CEO. October 20, 1997.(AP/Wide World Photos)

The SEC's "No Action Letter" that propelled a.n.a.lyst conflicts to new heights. October 24, 1997.

SBC CEO Ed Whitacre and Ameritech CEO d.i.c.k Notebaert announcing the sale of Ameritech to SBC for $62 billion. My firm, Merrill, tried desperately for a role but failed and so did I. May 11, 1998. (AP/Wide World Photos) (AP/Wide World Photos)

Mike Armstrong, CEO of AT&T, and John Malone, CEO of Tele-Communications Inc., taking questions after announcing AT&T's $32 billion acquisition of Malone's cable TV company. Armstrong had dreams of bundling phone, internet, and entertainment services over cable TV lines. June 24, 1998.(AP/Wide World Photos)

Like blood brothers, Qwest CEO Joe Nacchio and US West CEO Sol Trujillo yuk it up at the press conference announcing the merger of their two companies. Two days earlier, Nacchio threatened to back out of any deal that required him to share the CEO role with Trujillo. July 19, 1999. (AP/Wide World Photos) (AP/Wide World Photos)

One amazing leak: On October 5, 1999, Sprint CEO Bill Esrey (left) and WorldCom's Bernie Ebbers announced the merger of their two companies. But 27 days earlier, the deal and its exact price had been leaked. The stocks' values changed by a total of $14 billion during that period.(AP/Wide World Photos)

Merrill Lynch CEO David Komansky was President and then CEO during my nearly seven years at Merrill. June 1,1999. (AP/Wide World Photos) (AP/Wide World Photos)

Joe Nacchio, CEO of Qwest, talking up his company and the Internet. Qwest would later admit to inflating its revenues by $3 billion.(AP/Wide World Photos)

AT&T Wireless IPO: CSFB (my firm) and Salomon Smith Barney (Grubman's firm) competed hard for a lead role in the $10 billion AT&T Wireless IPO, the largest in US history. AT&T CEO Mike Armstrong (left), AT&T Wireless CEO John Zeglis (middle), and New York Stock Exchange Chairman d.i.c.k Gra.s.so, celebrating the initiation of NYSE trading. April 27, 2000. (AP/Wide World Photos) (AP/Wide World Photos)

My arb call from a mountaintop: waiting to speak on Qwest/Deutsche Telekom/US West rumors via CSFB's squawk box from Vail, Colorado. The rumors created panic trading and huge opportunities. March 2, 2000. (Howard Jacobs) (Howard Jacobs)

Members of my research team on a ski outing with clients at Telluride, Colorado. (From left) Julia Belladonna, Bill Newbury of TIAA-CREF, Ehud Gelblum, author, and Ido Cohen. January 2001. (Jeff Jacobs) (Jeff Jacobs)

Eliot Spitzer, New York State Attorney General, announcing his investigation into conflicts of interest in Wall Street research. Spitzer settled most cases, leaving many questions unanswered and misdeeds unpunished. April 8, 2002.(AP/Wide World Photos)

Congressional hearings on WorldCom: On July 8, 2002, just two weeks after the fraud was discovered, the House Financial Services Committee interrogated four key witnesses. (From left) Melvin d.i.c.k, Arthur Andersen; Bernie Ebbers, former WorldCom CEO; Scott Sullivan, former CFO; and Jack Grubman, Salomon Smith Barney telecom a.n.a.lyst. (AP/Wide World Photos) (AP/Wide World Photos)

Ebbers, silent but stoic at the Congressional hearings, with his high-powered defense attorney, Reid Weingarten (left). July 8, 2002. (AP/Wide World Photos) (AP/Wide World Photos)

Jack Grubman in front of the House Financial Services Committee: Asked whether he knew about special IPO allocations made to various telecom executives, Grubman waffled "I'm not saying no, I'm not saying yes. I just can't recall." July 8, 2002. (AP/Wide World Photos) (AP/Wide World Photos)

Scott Sullivan, former WorldCom CFO, in front of the House Financial Services Committee. July 8, 2002. Sullivan's fraudulent adjustments to WorldCom's books totaled a mind-boggling $11 billion. He pleaded guilty to numerous criminal charges yet was a highly effective witness against Ebbers.(AP/Wide World Photos)

Handcuffed Scott Sullivan (left) is led by federal agents from the posh New York City Hotel Elysee at 7 a.m. on the morning of August 1, 2002. He was charged with seven counts of securities fraud, conspiracy and filing false statements and was later sentenced to five years in federal prison. (AP/Wide World Photos) (AP/Wide World Photos)

Global Crossing executives take oath before testifying before the House Energy and Commerce Subcommittee: (from right) Chairman Gary Winnick, CFO Dan Cohrs, Executive Vice President of Finance Joe Perrone, President David Walsh, and former counsel Jim Gorton. October 1, 2002.(AP/Wide World Photos)

Global Crossing Chairman Gary Winnick offered $25 million of his own money to cover losses in his employees' 401(k) accounts, a pittance compared to their losses and his gains. October 1, 2002.(AP/Wide World Photos)