Mohebbi and the Memos

Yesterday, in the direct examination, Mr. Mohebbi testified about, and the government showed, memorandums he wrote raising concerns about the internal targets. Here is some language for the memos.

The language below is from a memorandum written in late November or early December and placed on Joe Nacchio’s chair. The defense may dispute whether Nacchio ever received the memo.

• “As we discussed this week, the Revenue and EBITDA numbers for next year are huge stretch and they require day to day monitoring as well as close cooperation between the units. We need our recurring business to literally take off by April-May time frame or the amount of one-time businesses required to fill the gap will be too large to deal with. Our track record in this area is not that good, as you know.”

• “On the CapEx. Side, we will probably have to come under $9.5 B due to overall economic conditions, which will force the units to cooperate and not spend money just because they have won the budget numbers. This is new to the old USWEST people. Lack of tools will force a lot of manual interventions to ensure no one is pending one dollar more than they need vs. approved levels they have. Unit head will certainly hate this, but this is the only was we will make the number, by constantly robbing from Peter to pay Paul.”

In a second memo, given to Nacchio’s assistant sometime in December, contained the following language:

• “I am attaching our best estimate of 1^st Quarter 2001 revenues, which I think is the most critical aspect (EBITDA again is much more manageable). As you cans see we need to hit at least $5,100M. Our best guess says we require $580M of non-recurring, about the same level as the 4^th Quarter but a huge number none the less. Its doable but if don’t crank up recurring growth by April, we got big problems.”