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Opening Bell: 3.30.07

AT&T, Qwest, Verizon win US govt telecom contract (Reuters)
Turns out that Qwest CEO Joe Nacchio was right! Qwest did have a monster government contract in the pipeline. Granted, it would've been a really, really long wait, since it was just announced yesterday, but it looks like the government can go ahead and drop the case against him. Let's hear it for the black box defense. Of course, it's not just Qwest, but rather Qwest, AT&T and Verizon, which are being given $20 billlion to overhaul the government's telecom setup.
Dell Reports It Has Found ‘Misconduct’ (NYT)
Dell, which is about as troubled as a company can get these days, has said that it's found evidence of misconduct, following long investigation into the company's accounting practices. Now, the company chose the word misconduct, which really doesn't sound like it's referring to accounting mistakes. Rather, it seems there were individuals within the company -- we'll find out how far up it goes down the road -- willfully cooking the books, or something like that. However, there's some hope that while the errors were intentional, they might not have been huge, so maybe investors won't be in for too much ticket shock when the company has to restate, if it does.
Oil rises sharply as Iran tensions escalate (AFX)
The first thing we noticed in this article is that oil is trading above $68/barrel again, but then we realized that it was talking about Brent North Sea Crude, as opposed to the Light Sweet stuff that we're more familiar with, which is trading a couple of dollar cheaper. That's ok, we'dd do the same thing if we were journalists, list the higher priced oil first, even if it's not the more prominent one. That rant out of the way, the precipitating crisis of WWIII has yet to be resolved, and there's no end in sight. But good news is that this time Blair's serious.
L.A. billionaires up bid for Tribune Co. (BusinessWeek)
It looked like billionaire Sam Zell was going to win control of Tribune Co. with his $33/share big, but the LA folks have phoned in a last minute offer of $34. This must gall Zell to know end, this kind of late-in-the-game oneupmanship. But reading that gave us an idea of a way to improve these kind of auctions. The bidding should be more modeled on poker. If at some point you raise to $5, you're opponent can't then raise it another $1. If he wants to raise it, he needs to bump it up to $10 -- an increment of $5, based on your last bet. Otherwise, you get the penny-ante kind of nonsense played by children and apparently private equity firms. So, if Zell wanted to put in a real raise here, he wouldn't have to worry about Burkle and Broad outbidding him by a penny. Instead, they'd have to really raise back, which would show how committed they are to the deal.

U.S. Steel plans to buy pipe maker (AP)
Synergies aren't always as obvious or straightforward as they are here. U.S. Steel will buy out pipeline maker Lone Star Technologies, whose pipes presumably use plenty of steel. The deal is worth $2.1 billion. We're big fans of vertical integration, so we'd like to see more mergers such as this.
Deal Makers Are Setting a Torrid Pace for 2007 (NYT)
If the pace of M&A is any indicator of Wall St. profits and bonuses -- which of course it is -- then Christmas 2007 should be merry indeed. Already, deal activity is running at a sizzling 24% higher pace this year compared to last, with total activity hitting a staggering $1.08 trillion. On a q-on-q basis things are down a little bit, but nobody ever pays attention to that, so ignore it. It's gotta be seasonal.
Pension Fund Files Suit Against Amaranth (WSJ)
The San Diego County Employees Retirement Association, which became well known for the amount that it lost in the Amaranth collapse, has filed a long-awaited lawsuit against the hedge fund for, well, losing their money. Of course, you can't have a financial failure without a lawsuit. We're not really sure what the core of the claim is -- perhaps the group thought it was buying a guaranteed annuity, as opposed to simply staking a single trader. In the meantime, this screws over other investors, since it means the fund must freeze whatever cash it has left in order to save for the lawsuit, whereas otherwise it could disburse its remaining cash back.
Is U.S. Government 'Outsourcing Its Brain'? (WSJ)
It's been a great time for the beltway bandits. The post era of big government Republicanism, which is closely associated with the post 9/11 era has seen soaring government spending, much of which has gone to outside contractors and consultants that do the heavy lifting the various bureaus are unable to do themselves Some wonder whether the government is 'outsourcing its brain', which is totally silly sounding. No doubt, we think companies like Booz Allen (whose headquarters are on "Solutions Drive", blech) are fairly sleazy, as we do most companies that suck too much from the government teet. Let's just say they don't have much incentive to keep costs down. That being said, when you're talking about big technology integration projects, there's nobody that gets paid government salaries that can do that kind of thing, so in that sense it has no choice but to outsource its brain.