AT&T expanded its accusations against MCI/WorldCom in a court filing Wed., saying it had routed Defense Dept., Army and Navy calls through Canada, creating a security risk. The accusation, in an objection AT&T filed in U.S. Bankruptcy Court, N.Y., disagreed with MCI/WorldCom’s statement (CD Aug 5 p1) that there wasn’t any access charge fraud as alleged by AT&T in an earlier objection (CD July 29 p1).
An internal review of MCI/WorldCom’s access charge practices shows the company is complying with legal and regulatory requirements, it told U.S. Bankruptcy Judge Arthur Gonzalez, N.Y., in a report filed Mon. The report was in response to AT&T’s July 28 filing with the court that outlined concerns about the fraud charges and asked the court to make changes in MCI’s reorganization plan to assure AT&T could file racketeering and fraud charges against MCI/WorldCom.
Shares in Midway Games tumbled more than 30% Wed. after Chicago videogame publisher reported disappointing results in its 2nd quarter ended June 30 and significantly reduced its fiscal year earnings forecast. In late afternoon trading, shares were down $1.02 (30.09%) at $2.37. CEO David Zucker told analysts in conference call that slashed earnings estimate was caused by company’s decision to delay certain key game releases from this fall until next year as part of major effort to boost quality of its products. Zucker replaced Neil Nicastro at Midway’s helm one week before E3 Expo in May (CED May 8 p6).
Acclaim Entertainment said Mon. it received notice from Nasdaq indicating it was granted 180-day extension -- until Jan. 20 -- within which to regain compliance with minimum $1 bid price per share requirement of Nasdaq SmallCap Market. But Acclaim said it was told that if it hadn’t demonstrated compliance with Marketplace Rule 4310 by Jan. 20, Nasdaq would determine whether it met initial listing criteria under rule. If company meets initial listing criteria, Nasdaq will notify it that it has additional 90 days in which to demonstrate compliance, Acclaim said. Acclaim would have right to appeal determination to Nasdaq Listing Qualification Panel but it admitted that “there can be no assurance that the company will regain compliance.” As company’s future on Nasdaq remains up in air, it continues to fight off lawsuits. It also faces SEC probe into revenue reporting of Acclaim and certain other game publishers (CED July 22 p4). Acclaim, meanwhile, continues to seek funding for its operations because of lack of capital and shortage of cash. One possible solution to latter problem, Acclaim said in preliminary proxy SEC filing earlier this month, would be sale of more stock and other securities -- issue that’s scheduled to be voted on at annual stockholders meeting Sept. 5 (CED July 23 p8). Same SEC filing revealed, among other things, that co-founder Gregory Fischbach would continue to receive former annual base salary of $775,000 until Aug. 2005 despite fact he stepped down as company’s CEO in June and held only his role as co-chmn.
Struggling game publisher Acclaim Entertainment is looking to sell more stock and other securities to help fund its operations, Glen Cove, N.Y., company said in preliminary proxy SEC filing Tues. Acclaim’s auditor, KPMG, said in publisher’s annual 2003 fiscal report earlier this year that it questioned Acclaim’s ability to continue as going concern because of lack of capital and shortage of cash (CED May 22 p4). Acclaim said in SEC filing Tues. that its annual stockholders meeting will be held Sept. 5 at Wyndham Windwatch Hotel in Hauppauge, N.Y. There, stockholders will be asked to vote on proposal to issue as many as 30 million shares of Acclaim stock or other securities over course of 6 months that follow meeting. Stockholders will also be asked to elect 7 directors and ratify appointment of KPMG as its auditor for next fiscal year. Acclaim also said in filing that it agreed to 2-year contract extensions with co-chmn. Gregory Fischbach and James Scoroposki through Aug. 2005 for $775,000 and $500,000 salaries and bonuses of 3.25% and 2.75% of company’s annual pretax profit, respectively. Filing said Fischbach and Scoroposki received $452,083 and $291,667 salaries in 2003. Meanwhile, filing said it entered into new employment deal with CFO-Exec. Vp Gerard Agoglia providing for him to remain in current positions until June 2006 (but to be renewed annually without written notice) providing him with annual base salary of $371,000 and bonuses of up to 100% of his then base salary subject to achievement of goals established by company. He received $216,417 salary in 2003, filing said. CEO Rodney Cousens received $410,121 salary in 2003 and $800,000 bonus, filing also showed. Acclaim also said it forgave loan to former pres. Edmond Sanctis and agreed to continue his salary for one year. Hours after filing was made, company announced that it named Paul Eibeler, ex-Take-Two Interactive pres., pres.-COO of Acclaim N. America. Cousens said: “We have gone to great lengths to implement new systems to improve the way we design our products, manage our operating expenses and stabilize the organization so that it can attain a stronger position in the marketplace. An important part of this process includes strengthening our senior management team and we are very pleased to have Paul join us and lend his leadership skills and industry- wide credibility to help expedite our improved performance and success.” As Acclaim continues to face class-action lawsuit alleging SEC violations among other things (multiple suits were recently combined into one complaint), company acknowledged late last week that SEC had targeted it and certain competitors as part of videogame industry probe (CED July 22 p4).
DVD-player installed base was 41.7 million U.S. households as of June, just 6 years after format’s rollout. But figure is misleading and actually higher, owing to homes with multiple devices capable of DVD playback. So contends preliminary report from research firm Centris released Fri. Moreover, group said growth in DVD household penetration was coming from other DVD- enabled platforms such as PCs, videogame consoles and portables, in addition to standalone DVD set-tops.
SBC filed an application with the FCC Thurs. to offer long distance service in its remaining 4 Midwest states -- Ill., Ind., Ohio and Wis. -- delivering more than 175 boxes of regulatory material to the Commission. SBC said it had received “strong endorsements” from PUCs in 3 of the states and “a preliminary indication” from the Ind. Utility Regulation Commission that it would support SBC’s long distance entry. “This multistate filing is the climax of 7 years of effort to bring competition, lower prices and more choice to consumers and businesses in our Midwest region,” SBC Pres. William Daley said. The 4 states, plus Mich., comprise the old Ameritech territory before the SBC-Ameritech merger.
FCC Comr. Adelstein said Tues. the agency made a serious error in its new media ownership rules, creating a situation where a small town like Minot, N.D., could be treated as if it had more TV stations than Detroit. Adelstein said his fellow commissioners should reconsider the rules to fix what he called an anomaly that would allow greater concentration in small markets. An FCC spokesman declined to comment, but agency staffers acknowledged privately that Adelstein could have a point. However, they said such an issue should be brought up in a petition for reconsideration.
The 3rd U.S. Appeals Court, Philadelphia, reversed a lower court’s decision to increase a bond that Sprint had to post in case it had to reimburse CAT Communications for blocking its customers from improperly using Sprint’s network. The July 11 decision grew out of a suit Sprint filed against CAT, a CLEC, in 2000, charging that CAT customers were using Sprint’s network for long distance calls without authorization or payment. The U.S. Dist. Court, Newark, N.J., issued a preliminary injunction in 2000 and required a $250,000 bond to cover expenses in the event CAT were found to have been enjoined wrongfully. In 2002, at the request of CAT, the Dist. Court raised the bond to $4.95 million because CAT reported it already was faced with $2.7 million in blocking fees by Verizon and other phone companies whose lines CAT leased. Sprint then appealed to the 3rd Circuit. Sprint also appealed the lower court’s decision to dissolve the preliminary injunction, but the appeals court affirmed that part (02-2209).
Depending on a judge’s decision, EchoStar may be required to remove its 2 Christian networks, DayStar and Family Net, from its Dish Network programming lineup, a spokesman said. EchoStar is in litigation with Dominion Video Satellite, owner of the Sky Angel Network, over terms of their contract.