Love stinks

(Upstart) I don’t follow celebrity gossip in the news. I’m completely unable to remember who’s supposed to be with whom, or why they’re leaving them, and the inevitable Entertainment Tonight publicity about the seamy details goes over my head. Other people seem to know why Patricia Arquette kicked Nicolas Cage to the curb, or to be in on the intricacies of the Meg Ryan/Dennis Quaid/Russell Crowe breakup.

I try my best, I really do. I just seem to be missing that twist in my DNA that would allow me to keep all these shifting he-said-she-said -Rosie/Oprah/Leeza-said stuff straight.

Normally, this causes me mere cocktail party embarrassment--something I can deal with. But now I’m expecting real professional flak from this disability, because a lot of telecom relationships are poised to turn pretty yellow, if the Verizon-NorthPoint romance is any indication.

The $800 million match-up seemed to have everything going for it last summer: Verizon would get to expand beyond its northeastern market, while NorthPoint would get—well, $800 million. But bright summer fades into chilly winter, and now, Verizon says, their affair has gone cold.

Specifically, NorthPoint’s cash flow has iced over; revenues are dipping, customers are failing to pay their bills and losses are mounting. Pegged at about $15 a share in August, NorthPoint slipped to $2 a share by November—way off its $34.75 high for the year.

The final straw, Verizon says, came when NorthPoint restated its Q3 earnings in mid-November and added $12 million to a loss that was already pegged at $79 million.

Market conditions, NorthPoint said.

Have a nice life, Verizon replied.

You can almost see the gang on The View nodding in sympathy.

At first everyone made nice in an effort to keep things civil. That lasted about as long as the average Cher marriage. On Friday, NorthPoint filed suit in a San Francisco court, in an effort to either force Verizon to the offer or to pay through the nose for the breakup.

They were slow to lawyer up. By that time, Verizon had already gone to court in Delaware to convince a judge they were in the right to put their knees in the breeze. NorthPoint promptly accused Verizon of weasling out of the deal to bulk up its near-term stock price.

NorthPoint is probably right to say that the market is to blame for their loss of sex appeal. But what that means in terms of legal obligation remains to be determined by a judge—probably a long string of them. What is evident is that many other planned link-ups are in the same kind of jeopardy. Nobody’s looking their best right now. Just in the digital subscriber world, Covad, another financially strapped DSL provider, was probably throwing a wary eye on its planned $600 million relationship with SBC when it issued a Q3 earnings adjustment of its own and announced 400 layoffs to trim costs.

So far, love still reigns supreme between the Texas baby Bell and the DSL provider: SBC announced it will pay out $150 million of that investment. But that was a week before the restated earnings report. And you know how contagious these intra-couple squabbles can be. Just ask Meg, Dennis and Russell.

Brian Quinton is Editor-in-Chief of Upstart. His brief fling with Cher ended in heartbreak after she dumped him for Gregg Allman. E-mail Brian at brian_quinton@intertec.com.