[GreenKeys] Fwd: Re: The demise of Western Union and its services
Don Robert House
[email protected]
Tue, 25 Feb 2003 18:48:03 -0800
>Date: Tue, 25 Feb 2003 10:41:10 -0800 (PST)
>From: Phil Schelinski <[email protected]>
>Subject: Re: The demise of Western Union and its services
>To: Don Robert House <[email protected]>, Ed Hickey <[email protected]>
>Cc: [email protected], Bob Liddy <[email protected]>,
> Bob Cnota <[email protected]>, Ken Clinkman <[email protected]>,
> Phil Schelinski <[email protected]>,
> Steve Kissinger <[email protected]>,
> David Weil <[email protected]>,
> Rush Glick <[email protected]>, Ben Stephens <[email protected]>
>
>
>Don
>
>There is another parallel to the demise of WU and that's the DEC corporation.
>
>Their PDP machines resided in every telco across the USA and all
>major university's.
>
>Their networking schemes were ahead of time --peer to peer
>communications versus IBMs Main frame SNA architecture was the media
>game at that time.
>
>As I recall their CEO became embedded in a court battle over
>protocol rights and then tried to enter the consumer PC market where
>they never learned to compete.
>
>One day soon we may witness the same scenario with a few RBOC's.
>
>As we speak 4 QWEST execs have warrants out for their arrest--
>
>Notebaert has had to restate earnings 3 times and still the books
>are under suspicion.
>
>SBC continues to pay record fines (in the $millions) fighting
>competition instead of introducing new products and services .
>
>The FCC ruled against the RBOC's this week but that only means they
>will change course.
>
>The ruling stated the local PUC's should set UNE rates then today
>our Governor R.Blagojevich announces the appointment of Ed Hurley
>-known to be an anti consumer advocate to head up the ICC. In the
>Tribune article Mr Hurley admits to a relationship with Carrie
>Hightman the President of SBC Illinois !!
>
>Her attempts at spin control, for each and every fine, would be
>humorous if they weren't given by an executive of a public company.
>
>CISCO AND AT&T announced a new partnership today and between them
>they could roll out interesting products.
>
>So save some space in your history database because the story of the
>Bell System is far from over.
>
>Phil Schelinski
>
>
>
> Don Robert House <[email protected]> wrote:
>
>A depressing story. Edited for your information. The complete
>history "Road to Corporate Oblivion" can been seen at:
>
>http://autodin.net/alp/western_union_chronology_of_events.htm
>
>1980
>
>Western Union long distance telephone service introduced.
>
>Western Union lobbies Congress for repeal of Section 222 of
>Communications Act to permit its entry into international telex
>market.
>
>Television and radio broadcasters expand use of Westar system.
>
>1981
>
>Transfer of TWX (renamed Telex II) from AT&T facilities to Western
>Union Digital Exchange System completed.
>
>Further write-down of assets of DSC, which is folded into newly
>formed Field Service Division.
>
>Western Union acquires 50% of Airfone.
>
>Sale of real estate assets, including Upper Saddle River, New Jersey
>headquarters building.
>
>AT&T proposes sharp increase in rates for lease facilities.
>
>Western Union Telex networks peak at 141,000 subscribers after 23
>years of growth.
>
>Sales of individual transponders to Westar customers begins.
>
>Curtiss-Wright begins to purchase shares of Western Union common stock.
>
>New federal law enacted at year end amending the Communications Act,
>permitting Western Union to enter international telex market.
>
>1982
>
>Westar IV and Westar V launched.
>
>AUTODIN II system canceled by Department of Defense.
>
>Western Union sells PR Newswire Association, Inc.
>
>Western Union Easylink electronic mail service introduced on a limited basis.
>
>Company begins major push into cellular mobile telephone equipment.
>
>Western Union acquires E F Johnson Company, manufacturer of cellular
>telephone equipment.
>
>Curtiss-Wright increases its purchase of Western Union shares.
>
>Net income reported for 1982 is the last annual profit reported by
>Western Union Corporation
>
>1983
>
>Western Union and Merrill Lynch form New York Teleport joint venture.
>
>Easylink expands as service provider on new Western Union packet
>switching network.
>
>Western Union Mailgram contract canceled by the U.S. Postal Service.
>
>Western Union international Telex service expands.
>
>Corporate debt increases. Work force reduction implemented.
>
>Sharp increase in local telephone access line charges, previously
>deferred, again proposed in anticipation of Bell System break up.
>
>Fourth quarter special charge of $125 million results in net loss for 1983.
>
>1984
>
>Western Union Board of Directors approved 1984 expenditure of $115
>million to support rapid acceleration of Easylink growth.
>
>New bank credit lines established. Workforce reduction is implemented.
>
>Banks cut off Western Union line of credit, producing sudden liquidity crisis.
>
>Salaries and wages temporarily reduced by 10% for both management
>and union employees.
>
>As year ends, bankruptcy looms.
>
>1985
>
>Deal worked out with banks to provide limited interim financing to
>avoid bankruptcy filing.
>Aggressive program of Western Union asset sales begins, resulting in
>1985 sale of E. F. Johnson, Telestat Systems, Western Union interest
>in Teleport and some cellular telephone interests to raise cash.
>
>Work force reduced by 22 percent.
>
>Prolonged strike by unionized employees disrupts operation.
>
>Exorbitant access line charges put into effect by "Baby Bell"
>telephone companies during 1985 produce an increase in Western Union
>leased facilities costs of more than $100 million annually and
>prompt many telex subscribers to cancel service.
>
>Western Union records fourth quarter charge of $300 million for
>write-down in value of switching and transmission equipment.
>
>1986
>
>Curtiss-Wright sells all of its Western Union stock. All
>Curtiss-Wright Directors resign from board.
>
>Government Systems Division sold to American Satellite Corporation
>for $155 million cash.
>
>Western Union interest in Airfone sold to GTE for $59 million cash.
>
>Western Union takes fourth-quarter charge of $468 million, mainly
>for write-down of Telex, private wire and satellite assets.
>
>1987
>
>Remaining Western Union cellular communications assets sold.
>
>After several postponed deadlines, the Bennett S. LeBow plan secures
>all necessary approvals and is implemented on December 30th. With
>bankruptcy filing prepared and ready for submission to court,
>bankruptcy is averted at the eleventh hour.
>
>1988
>
>Lebow management team takes over on January 12th. Most of previous
>officer group removed during first quarter.
>
>Westar system sold to Hughes Aircraft Company
>
>New workforce reduction began, totaling 25% by year end.
>
>Worldcom private line business sold to Tele-Columbus AG of
>Switzerland for $56 million cash.
>
>Western Union records charges totaling more than $1 billion for
>1988, representing write-down of switching and transmission
>equipment and other non-recurring charges. Company has huge
>negative net worth.
>
>Pension benefit accrual stopped 6/30/88 for management and 12/31/88
>for union employees. Pension entitlements frozen as of those dates.
>
>Western Union Telex subscriber base, which had been in serious
>decline for three years, is now in meltdown.
>
>1989
>
>Western Union voice and private wire businesses sold to Telecom USA.
>
>Moorestown, NJ Central telephone bureau, in service since 1971, is closed.
>
>Western Union acquires National Payments Network, a bill paying service.
>
>1990
>
>Western Union Financial Services, Inc. (FSI) is established as a
>separate entity, a wholly owned subsidiary of Western Union
>Corporation. Henceforth, FSI will be the provider of Western Union
>Money Transfer Service.
>
>Western Union sells its Advanced Transmission System unit (local
>cable distribution business) to MCI.
>
>Western Union reaches agreement in July to sell its Business
>Services (Telex and Easylink) unit to AT&T for $180 million cash.
>
>Union lock out.
>
>1991
>
>Shareholders approve change in name of parent company from Western
>Union Corporation to New Valley Corporation Western Union identity
>is vested in FSI, operating as an independent subsidiary, whose
>business is strong.
>
>Company begins discussions with Pension Benefit Guaranty Corporation
>(PBGC) concerning PBGC takeover of underfunded Western Union Pension
>Plan.
>
>FSI forms international division to pursue worldwide money transfer
>business, which is growing rapidly.
>
>1992
>
>Involuntary Chapter 11 action pending in Bankruptcy Court is stayed
>for all of 1992.
>New Valley reaches agreement with PBGC for takeover of Western Union
>pension plan.
>
>FSI's consumer money transfer business shows substantial growth
>during the year, with international component especially strong.
>
>1993
>
>Unable to secure agreement among its creditors on its prepackaged
>plan, New Valley Corporation, at its own request, is placed under
>the protection of Chapter 11 of the U.S. Bankruptcy Code as a
>debtor-in-possession by the court. Western Union Financial Services
>Inc. (FSI) is not included in the bankruptcy filing.
>
>Trading in New Valley common and preferred shares is immediately
>halted by the New York Stock Exchange, which then proceeds to
>de-list the company's stock.
>
>FSI, which now accounts for virtually all of New Valley's ongoing
>business, records accelerated growth in revenue and income for 1993.
>
>1994
>
>In January, the Bankruptcy Court terminates the ten-month period
>during which New Valley alone had been permitted to propose a
>Chapter 11 reorganization plan. As a result, in February, three
>alternative reorganization plans are filed with the court by
>debt-holders and shareholders.
>
>On July 7, the Bankruptcy Court rules that FSI is to be sold in a
>court-supervised auction to be held in September. The sale of FSI,
>whose robust business and prospects in the international money
>transfer market have attracted cash offers well beyond the
>previously assumed level of it's worth, has become the clearly
>apparent means of resolving New Valley's bankruptcy and settling
>creditors' claims.
>
>On September 2, First Financial Corporation (FFMC), of Atlanta,
>announces that it will bid $800 million in cash, plus assumption of
>the pension plan in the forthcoming auction for FSI.
>
>On September 19, the auction sale of FSI is held in the Bankruptcy
>Court in Newark, New Jersey. The winner is FFMC, with a bid of $893
>million in cash plus assumption of the pension plan liability
>(valued at $300 million) for a total consideration of $1.193 billion.
>
>In October, an agreement is hammered out among the various parties
>at interest on a New Valley reorganization plan with all claimants
>sharing in the cash proceeds to be realized from the sale of FSI.
>
>On November 1, the agreed upon reorganization plan is confirmed
>(approved) by the Bankruptcy Court, concluding three years of court
>proceedings.
>
>On November 15, the sale of FSI to FFMC is consummated.
>
>1995
>
>In January, New Valley Corporation emerges from Chapter 11
>bankruptcy. It exists today on paper, as an affiliate of Brooke
>Group Ltd., which is located in Miami, Florida and is controlled by
>Bennett S. LeBow. It serves as a corporate vehicle for Brooke's
>investments in brokerage services, real estate operations and other
>areas.
>
>In June, FFMC agrees to merge into (be acquired by) First Data
>Corporation (FDC).
>In October, this merger is completed and the FFMC name disappears.
> In a strange turn of events, FDC, which had failed in it's attempts
>to acquire FSI before and during the auction sale in 1994, now
>acquires FSI by acquiring it's acquirer.
>
>FSI, which has inherited the valuable "Western Union" brand name,
>exists today as the largest subsidiary of FDC. It's worldwide
>consumer money transfer service has grown to the point where, in
>2001, it will record nearly $3 billion in revenue and about $800
>million in profit
>
>
>
>--
>--------------------------------------------------------
>Don Robert House
>North American Data Communications Museum
>URL: http://www.nadcomm.org
>Computer Museum of America
>URL: http://www.computer-museum.org
>
>
>
>Do you Yahoo!?
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--
--------------------------------------------------------
Don Robert House
North American Data Communications Museum
URL: http://www.nadcomm.org
Computer Museum of America
URL: http://www.computer-museum.org
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