You would think a telephone company would know when and how to hang up a phone. It's like a telemarketer; they're going to give it a good shot, but at some point the odds are good the person you called is going to hang up on you and get back to their dinner. Reports indicate Qwest Communications (Q) is preparing a third offer to buy MCI Communications (MCIP). MCI has already agreed to be bought by Verizon (VZ) twice. Does Qwest really think the third time will be the charm?

MCI wants to merge with Verizon for many reasons, and most have nothing to do with price. If price was the main issue, Qwest would be winning this battle since all of their offers have trumped the Verizon deals that MCI accepted. You really can't blame MCI for continually rejecting Qwest. The companies are like night and day. Verizon is the best telecommunications firm around. Qwest is one of the worst. Verizon has a very healthy balance sheet. Qwest is mired in debt. In fact, according the Qwest's year-end 2004 financial statements, assets less liabilities equals a negative $2.6 billion.

No wonder they are desperate to do the MCI deal. If they don't they're in serious trouble. After going through bankruptcy court, MCI (formerly Worldcom) has cleared its books of billions in debt. Combining their improved finances with Qwest's mess would make for a stronger, larger company. However, Qwest management didn't get the memo yet; MCI isn't going to merge with you. You can make another high-ball offer and go straight to the MCI shareholders for a vote. Only problem with that is, I don't know a single person who would want to own shares in Qwest-MCI.

These desperation tactics make me want to short Qwest shares, as I don't see either scenario (another failed buyout offer or ultimately winning by overpaying for MCI) as boosting shareholder value.