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Technology Stocks : Global Crossing - GX (formerly GBLX) -- Ignore unavailable to you. Want to Upgrade?

To: RobertSheldon who wrote (6215)	5/23/2000 4:38:00 AM
From: Teddy	Respond to of 15615

details from The Wall Street Urinal: May 23, 2000 Global Crossing Sues Tyco Unit, Claiming Fraud, Secrets Theft By MARK MAREMONT Staff Reporter of THE WALL STREET JOURNAL Global Crossing Ltd. accused a unit of Tyco International Ltd. of fraud and theft of trade secrets, claiming that Tyco agreed to help Global Crossing build an undersea fiber-optic network around South America, then misappropriated those plans to invest in a competing venture. The allegations came in a lawsuit filed in U.S. District Court in Manhattan. In the suit, Global Crossing also alleged Tyco, once its key supplier, had billed it for about $110 million in "bogus" invoices relating to another undersea cable project, and had "attempted to extort" more money by threatening to stop critical work on that project. Global Crossing is seeking more than $1 billion in damages. A Tyco spokeswoman said officials couldn't immediately comment because they hadn't yet seen the lawsuit. The dispute with a major customer comes at an awkward time for Tyco, which is attempting a public offering of shares in its undersea cable unit, called Tycom Ltd. In its latest registration filing, Tycom said it is hoping to raise as much as $1.5 billion in the offering, valuing the whole unit at as much as $15 billion. Optimism about the huge Tycom offering has buoyed Tyco's stock in recent months, helping it recover from a sharp drop late last year related to questions about Tyco's accounting practices. Based in Bermuda and managed from Exeter, N.H., Tyco has interests in electronics, disposable medical supplies and fire and security products. Tyco had revenue of $22.5 billion for the fiscal year ended Sept. 30. The Tycom unit contributed $1.64 billion to that total. News of the lawsuit was released after regular trading hours. In after-hours trading Monday, Tyco stock fell to about $44. In New York Stock Exchange composite trading at 4 p.m., Tyco had fallen $1.375 to $46.25, while Global Crossing stock had dropped 54.8675 cents to $28.015625 in 4 p.m. Nasdaq Stock Market trading. A person familiar with the situation said Global Crossing has been Tycom's biggest customer, providing more than $2.2 billion in revenues to the unit since 1997. Tycom reported $4.57 billion in revenue from fiscal 1997 through the first six months of this fiscal year. In addition to constructing cable systems for others, Tycom has said it plans to build its own global network of undersea cables over the next few years. Leo J. Hindery Jr., Global Crossing's chief executive, said relations with Tyco had almost irretrievably broken down after 13 months of fruitless talks, adding that the dispute "made it real hard to do business" with Tyco. He said the lawsuit was the first ever filed by Global Crossing. The dispute centers on Tyco's agreement on April 28, 1999, to build a $700 million fiber-optic network around South America for Global Crossing, which also is based in Bermuda but operates from Beverly Hills, Calif. Global Crossing claims the contract award followed months of preliminary collaboration in which it shared confidential information with Tyco, including its cost structure, marketing plans, and undersea routing surveys. Thirteen days later -- five days after Global Crossing made a $40.8 million down payment on the contract -- Tyco announced it would build a competing South American cable system for Spain's Telefonica SA. Tyco took a 25% stake in the planned $900 million Telefonica cable system. Global Crossing says it believes Tyco was secretly negotiating with Telefonica at the same time as its own deal, and that many of the same Tyco employees worked on the two deals. It also claims the Telefonica network has "striking similarities" to its own cable, using many of the same landing sites and following a similar route, including a land portion over the Andes mountains. The suit also accuses Tyco of saving months of planning on the Telefonica system by "simply stealing the results of Global Crossing's costly and lengthy project analysis." The Telefonica deal made Tyco a competitor instead of just a supplier, Global Crossing claims, and violated two agreements it had with Global Crossing. After declaring the contract void "based on Tyco's fraud," Global Crossing says it demanded its $40.8 million back. But Tyco has refused to return the money, it claims, and has similarly "flatly refused" to return undersea charting information paid for by Global Crossing. Last July, Global Crossing says it awarded a new contract for the South American cable to France's Alcatel SA, at an additional cost of several hundred million dollars. The lawsuit also discloses another dispute between Tyco and Global Crossing, over a $600 million trans-Atlantic cable built by Tyco for the carrier. Global Crossing claims that Tyco issued a "bogus" invoice for a $31.1 million final payment last August -- due on the final day of Tyco's fiscal year -- even though an independent engineer said the system wasn't yet complete. Tyco also has been earning commissions by selling capacity on the trans-Atlantic system for Global Crossing. The suit claims that Tyco has "repeatedly issued bogus invoices for commissions which have not been earned," which totaled more than $80 million by last October. Simultaneously with filing the lawsuit, Global Crossing said it referred the dispute over the trans-Atlantic cable payments to arbitration.

To: RobertSheldon who wrote (6215)	5/23/2000 10:12:00 AM
From: M. Charles Swope	Respond to of 15615

Bob wrote: "One of the comments I often heard when I was first researching GBLX was that they would tie folks up in litigation if they got crosswise." The WSJ reported: "He [Leo Hindery] said the lawsuit was the first ever filed by Global Crossing." Now, these two statements aren't necessarily contradictory (it's possible that all of GBLX's opponents buckled under before a suit was filed) but, still, they do seem somewhat at odds. Personally, I would be uncomfortable investing in a company that used oppressive litigation, or the threat of same, as a normal business practice in dealing with its partners or suppliers. And that's not a moral judgment either, it just seems like that sort of thing comes back to bite you sooner or later. Please tell me that GBLX has good reason to be suing here. Charlie