WorldComNews.com

Media Archive
June 24-30
Some Headlines and Commentary Provided By Ben Silverman and DotComScoop.com

Sunday June 30, 2002 @ 12:32 PM EDT
I love the British for their wit, strength and ability to rip into people and institutions. In "Day the WorldCom world was turned upside down" Jamie Doward of The Observer examines the company's history and provides a solid analysis of where the company wrong. "Staff recall a company in permanent chaos. Far from being the first truly global unified telecoms firm offering everything from web hosting to telephony and data services, WorldCom was a company struggling to understand itself," Doward writes. Least we forget that WorldCom was already close to the edge of oblivion before last week's announcement.
The BBC's Jeff Randall, writing for The Telegraph, is ever-so blunt. "The way to deter white-collar crime is to treat it like blue-collar crime," he writes. About WorldCom he says, "By surfing a tsunami of investor credulity, WorldCom fooled analysts, accountants, auditors, lawyers, regulators and, yes, newspaper pundits."
This is probably one of the better stories to come out of the WorldCom debacle. Seth Schiesel of The New York Times details how companies like WorldCom, Qwest and Global Crossing pushed their competitors to overreact based on false assumptions. "Our performance did not quite compare and we were blaming ourselves," Sprint Chairman and CEO William Esrey said. "We didn't understand what we were doing wrong. We were like, `What are we missing here?'" The article provides some interesting insight into how AT&T and Sprint drove their strategies over the past few years. (Free registration required)
It's time to bust out the commentary stick... PBS' Daniel Yergin chimes in via The Washington Post."For savvy investors, the party not to be missed was "TMT" -- technology, media and telecommunications. WorldCom, which happens to carry 50 percent of the world's e-mail traffic, was a beneficiary. So was Global Crossing, which was formed in 1997. Taken public in 1998, its market capitalization soon reached $10 billion. When that milestone was achieved, one of its senior executives penned a simple note to an acquaintance: "God bless America," Yergin writes.
A spiffy WorldCom editorial cartoon, but meanwhile the Jackson Bandits, a minor league hockey team, wonder what their future holds. The Bandits are co-ownder by former WorldCom CEO Bernie Ebbers.
Democraps vs. Republicants... no one wins. But the WorldCom disaster is providing ample fuel for Democratic fire.
Not so much a WorldCom-related article, but WorldCom has brought certain issues into the limelight. The perils of relying on those false profits is just one of them.
Talk about awful Time-ing. Time Magazine was obviously planning ahead and in a patriotic mood when it chose to celebrate the Bicentennial of the Lewis & Clark Expedition with a cover story this week. The magazine did a wonderful job, but WorldCom will dominate magazine covers this week and while Time will stand out, the sad truth is that most Americans probably don't know jack about Lewis & Clark and don't want to. For those who wish to read more about Lewis & Clark, I suggest Stephen Ambrose's "Undaunted Courage: Meriwether Lewis, Thomas Jefferson, and the Opening of the American West."
Business Week simply asks, Can trust be rebuilt? The magazine also says that Bernie Ebbers has left a sorry legacy.
Saturday June 29, 2002 @ 6:04 PM EDT
Bernie Ebbers joins a long list of Canadian troublemakers in America; from Marty McSorley to The Smothers Brothers. ""It was great to see someone who we knew do so damned well, and we are all kind of disturbed at all the bad things that seem to be happening now. Hopefully he will land on his feet," said an old high school and college buddy of Ebbers.
Let's check the newstands.. Time Magazine has an editorial cartoon about WorldCom... But Newsweek is already giving readers a preview of its forthcoming cover story. "One confidence-shattering aspect of the WorldCom scandal is how unsubtle it was. By the company’s account, chief financial officer Scott Sullivan, who was fired last week, began treating certain corporate expenses as capital investments last year," Allan Sloan writes.

Saturday June 29, 2002 @ 5:32 PM EDT
How is Australia impacted by WorldCom? The article doesn't do much to answer the question.
At least two businesses in Florida say the WorldCom news scares them. Um, can we get a little better picture here?
Leave it to the National Review to have something good. "By 1997 the core voice revenues of established carriers began to deteriorate, a process continuing today at an accelerated pace as Internet fax and e-mail displace no-rush voice calls. Ebbers did not fully grasp this," writes John C. Wohlstetter in "The Rise and Fall of the Ebbers Empire.
Back in November 2000, USA Today's Kevin Maney pretty much nailed the future of WorldCom. The heart and soul of WorldCom is sulky CEO Bernie Ebbers' astounding capabilities in dealmaking. That's it."
No kidding? "Some Phone Companies Saw Sales Calls Spike After WorldCom's Disclosure," according to Dow Jones Newswires.

Saturday June 29, 2002 @ 3:33 PM EDT
FYI... I just donated a bunch of clothes to the local Salvation Store and did so in the name of "Current and Former WorldCom Employees." I'm out of WorldCom swag though (donated what I had after Sept. 11 for the clean-up effort at the WTC site), anyone want to send me a t-shirt (XL) or hat? Email me and I'll give you an address to send stuff to.
I like Light Reading a lot. No, not as in fluff, as in the optical networking online magazine. I wrote about these guys earlier this year when they acquired Unstrung. Recently laid off WorldCom workers may want to read this article about telecom workers leaving the biz for greener sectors.
Xerox is no WorldCom, or Enron for that matter. The company's recent restatement was expected and may acutally increase future cash flow.
S.E.C. Chairman Harvey Pitt stopped by Neil Cavuto's show on Fox News on Thursday and spoke out about corporate shennanigans. Within 12 hours of the news hitting the public, we were in court claiming that WorldCom committed fraud. This is what we mean by real time enforcement," Pitt said.
Judith Oppenheimer from ICB Toll Free News points out that WorldCom executive Vince Cerf is the Chairman of ICANN, the controversial organization that controls the Internet domain space.
Mailbag: Sharon from Seattle writes, "Did you have an inclination that this might happen? I read your newsletter and you cover WorldCom a lot, but there was never any mention of something like this happening. Answer: I don't think anyone in the media saw something like this coming, I certainly didn't. WorldCom was ripe for an accounting scandal, but I didn't foresee one of this scale. On May 2, I wrote about the immediate aftermath of Bernie Ebbers' departure. One thing I talked about was the reemergence of Jonathan Crane as a player in the WorldCom family. All indications point to Crane playing a very central role in the company going forward. I also wrote about future layoffs at the company, though the numbers I gave pale in comparison to what really happened. There was also a mention of two possible overseas relationship. I haven't heard anything about those since and I can only ASSUME that these may not come to fruition in light of recent news.

Saturday June 29, 2002 @ 2:33 PM EDT
The hamlet of Clinton, MS is quickly turning into a media encampment. And even though only 90 people at WorldCom's HQ were laid off, the cops were still on hand just in case. For more info on Clinton, check out the town's official website. Oh, and in case you didn't know, Clinton was home to a prisoner of war camp during World War II.
Unofficial statistic... Of the approximately 100 WorldCom employees I know, at least 16 were laid off. That almost coincides with the fact that about 20 percent of the company's workforce was shown the door. At least a dozen people have expressed to me that they may just quit. Almost everyone else said they are currently looking for another job.
TheStreet.com has a nice rundown of their WorldCom coverage from the past week. Warning: Any article that has a "p" in the URL after the root (i.e. www.thestreet.com/p//) is for paying subscribers only.
Indian firm VSNL says it didn't take a big hit on WorldCom.
Why wasn't more funding for the S.E.C. including in the bloated Homeland Security Package? Seems that our economic stability is essential to homeland security, don't you think? And hey, if the S.E.C. needs someone to help them find trouble, I'm just a phone call away.
Ayre, from the bonnie hills of Scotland The Scotsman checks in and gives a farewell to irrational exuberance. "For many, the greater crime is breach of trust, and for that America will exact a price. A market economy cannot function when trust is abused," the paper says.
Only about 450 jobs will be lost overseas, according to The Register.
BroadbandReports.com WorldCom discussion.
The benefits of working for WorldCom. Do a search for "customer service," they're still hiring, apparently.
Dave McPherson of the Providence Journal cited the blog in his Netrunner blog.
PC Magazine saw fit to cite Dotcom Scoop in this WorldCom story. The Online Journalism Review also gave us some ink (scroll down).
Ok, it's not about WorldCom, it's about BellSouth. But imagine if this guy had to depend on WorldCom for cell phone service.

Saturday June 29, 2002 @ 2:15 AM EDT
RonK, who publishes the Camp Enron Report, pointed something out to me. Earlier this year former General Electric Chief Jack Welch was over in London talking to a bunch of bankers. "There's one thing you can't cheat on and that's cash, and Enron didn't have any cash for the last three years. Accounting is odd, but cash is real stuff. Follow the cash," Welch said. Big Jack also lamented that the dot-com bubble was "fifty times as big as Enron." That's the comment RonK pointed out to me. I agree, somewhat. But the dotcom bubble was actually fairly transparent. The IPO's were huge, but there was ample evidence that the companies in question were never going to make money. I got in on the MP3.com IPO; bought at $28 and then the stock went off like a rocket on day one and I sold at $96. There was NEVER a thought in my mind that MP3.com would be a valuable or viable business down the road. It didn't even occur to me to hold onto the stock past the first day. I got in on the IPO for purposes of making a lot money, fast. I did that and moved on. I never exercised the stock options at either dotcom I worked at because I'd knew they be worthless. And when I was in the market my money was in stocks like Boeing and Anchor Gaming, not Microstrategy and Excite@Home. It was blatantly obvious both as a new economy worker and as an individual investor that the dotcom hype was bullshit perpetuated by Wall St., Silicon Valley and Madison Ave. It should not have a taken a genius for people to realize that and I still get pissed when people act surprised about what happened. WorldCom is about a strategy of growth through acquisition and profit by fraud though. It's not the same as the dotcom B.S., but it's similar in that everyone ignored obvious factors and let the company rumble down Wall St. without a stop sign in sight.

Saturday June 29, 2002 @ 1:46 AM EDT
From an anonymous WorldCom employee:
17,000 layoffs today at WorldCom, More to come?
With the latest bad (and to quite a few affected), good news that today was their last day working for Telecommunications patsy WorldCom, what happens to the people left standing?
Rumor has it that customer retention and not new logo acquisition is going to be the focus over the next few quarters. VPs and even new CEO Sidgmore have been making the rounds personally to assure that plum accounts stay within the fold and don't bolt over the next few critical months.
Internal E-mails were sent out with the cryptic "new compensation plans are forthcoming" along with holds and limits on current payouts due to the latest fiscal nightmare. The sales staff did not receive pay raises (merit or otherwise) last time around, no new stock options were given at the field level, (unlike the Board), but coffee service was brought back (YAY!). In the mean time, sales offices are filled with the walking wounded. A few brave souls actually went into the field cold calling to try to drum up business and were both ridiculed and pitied at the same time. Needless to say, from a sales perspective, there has never been a more difficult time to try to get that "big" (let alone ANY) customer that will bounce back your quota. Look for several defections and active raping of the WorldCom customer list from the biggies out there, AT&T, Sprint and the others. They are recruiting ex- and exisitng employees at a wicked pace. WorldCom is very vulnerable to a blitz from their rivals to steal existing customers unless they focus on making the payout for sticking with this beaten dog monetarily fruitful for their staff and customers, and this may be a case of too many cards stacked against the deck.
- Direct from the field - [I am] taking a week off to lick [my] wounds and wonder if it really is better to have this job right now...the mood of the people leaving today was actually a lot more upbeat than those left in the office, I envy them.
The Wall St. Journal reports that WorldCom's accounting problems may predate 2001. Current auditor KPMG wants to do a broad financial review of the company. "People close to the matter said the expenses Mr. Sullivan capitalized extended beyond access fees to other operating costs, such as maintenance and repair costs," the paper reports.
The BBC was snooping around WorldCom's Northern Virgnia offices and found the atmosphere to be gloomy. Perhaps they should have set up a fish & chips stand!

Friday June 28, 2002 @ 8:58 PM EDT
I've been watching the national news coverage of WorldCom and the networks are being a bit misleading. NBC's "Nightly News" report tonight seemed to blame the layoffs on the accounting scandal and that's not really the case. Earlier this month USA Today reported that the company would cut 16,000 jobs (grabbed an AP rehash of that story where the wire service also confirmed the plans). It was common knowledge inside the company, and even in the media, that today was supposed to be the day pink slips were handed out. So while the accounting scandal most likely cost some more jobs, and will in the future, these layoffs were already planned. Chances are NBC wouldn't have covered the layoffs without the accounting scandal.
WorldCom talks to banks, promises cooperation. Guess the headline says it all.
New Jersey's own IDT said it will offer up to $4 billion to purchase WorldCom's MFS Communications unit. MFS provides local phone services to corporations. IDT acquired the assets of bankrupt Winstar earlier this year (Or was it last? I'm not good with dates).
The S.E.C. is attempting to get off its ass and do its job. The Commission today ordered the 945 largest publicly traded U.S. companies whose chief executive and chief financial officers are now required to personally certify-in writing, under oath, and for publication-that their most recent reports filed with Commission are both complete and accurate. Officers who make false certifications will face personal liability. That's a mouth full. The list of companies can be found here. The companies have until August 14, 2002 to comply. This should be fun to watch.
Disney today also restated earnings for 2000 and 2001. But there's a hitch. The restated earnings actually boosted Disney's results.
Washington state's pension fund lost $75 million on WorldCom, which is just hammering home the issue of reigning in Corporate America and forcing the funds into courts to try to get some revenge.
Here's the statement that Andersen released a few days ago.
A bit hard to read because of the font color, but a 1999 biographical article on Bernie Ebbers serves as a decent little profile.
Disgraced CFO Scott Sullivan joins Billy Crystal, Calvin Klein, Wesley Snipes and a host of others on this list of notable SUNY alumni.
Others who could feel some WorldCom pain are organizations that WorldCom sponsors events for... Professional Golfers Association, Indy Racing League and countless trade shows.
WorldCom CEO John Sidgmore seems to be a very respected businessman. He also seems to be very charitable. His family has set up a foundation and past contributions have been to The National Alliance for Austism Research, Johns Hopkins University and The United States National Holocaust Memorial Museum, among others.

Friday June 28, 2002 @ 6:12 PM EDT
I just wrapped-up my interview on KPHN 1190 AM in Kansas City. Sadly the station is changing formats and KC is losing a great business news radio station. So today was the last day of business programming and I'm honored they devoted about 10 minutes of their time to talking to me. Good luck guys!
Details of what went down at WorldCom's Cary, NC facility today. Also notes that North Carolina's state pension plan has lost about $100 million on WorldCom stock in the past year.
330 WorldCom pink slips handed out in Tulsa. As noted by one worker, there is some serious "survivor's guilt" going on. Anyone whose been through layoffs knows this to be true.
Salon either doesn't have the time or the staff to cover WorldCom it seems. But this short 1999 article about Bernie Ebbers asks if he's a 19th century-style tech tycoon? Um, no, he is not.
Slate meanwhile gives WorldCom its Whopper of the Week Award. Yawn.
This is what is called a "temporal blog," which means it won't be updated forever. A great example of this is the 9.11 Blog that SiliconValley.com did.
Writers may want to be careful about using the term Worldcon.
Nonetheless, my friends at The New York Post saw fit to pen an editorial yesterday simply entitled Worldcon.
The MCI Center in D.C. may have to find a new name. Interesting to note that MCI actually helped fund the construction of the building through loans to the owner.
A special thanks to BroadbandReports.com, John Paczkowski of SiliconValley.com, Dan Gillmor of The San Jose Mercury News, J.D. Lasica, Cursor.org and John Hiler of MicroContentNews.com for linking to the blog.

Friday June 28, 2002 @ 5:00 PM EDT
Fired WorldCom CFO Scott Sullivan was the apple of Oswego's eye a few years ago, as evidenced by the article about him in SUNY-Oswego's alumni mag. (Thanks to the Devil for this link)
"The good news is WorldCom has assets to sell. The bad news is the price for those assets is at an all-time low," Eileen Eastman of research firm The Yankee Group says.
With so much accounting misconduct at big corporations, some people wonder why books are not being checked with the assumption that there is fraud afoot. I think we can all assume that most companies fudge their books in some way.
Long Island joins the list of WorldCom victims. Be careful of the amazingly intrusive advertisement on this page.
Good rundown of what U.S. commentators are writing about accounting fraud. From Radio Free Europe, woo-hoo!
Huge compensation packages make CEO's nuts! Basically the way executives are paid makes them go for the big kill and not worry about the consequences. In effect, corporate boards ain't doing their jobs.
Let's not forget what happened the last time WorldCom laid off workers; some nutball in North Carolina threatened to fly a plane into one of the company's offices.

Friday June 28, 2002 @ 2:00 PM EDT
Combine the WorldCom mess with the collapse of Global Crossing and KPN Qwest, and you've got the makings of an Internet disaster!. At least in Europe.
With a name like Chip Pickering you better have some power because if you don't, you're screwed in life. Luckily for Chip he's a Republican Congressman from Mississippi and he's also the recipient of more money from WorldCom than any other poltician.
You see, this is the scariest part of this debacle. It wasn't about greed, it was about keeping the company in business. I'm eating Nilla Wafers and even I realize that WorldCom should actually be a drastically different company right now. The asset sell off and layoffs should have probably happened over a year ago.
Once again, readers prove their worth, and this one's a WorldCom employee to boot. "I think you might be mis-reading the SEC's request for injunction when you say that it prohibits WCOM handing out severance. The key word there is "extraordinary" - WCOM's severance policy has been around for at least the last 15 months and provides for payments to all employees who are laid off. In other words, these are "ordinary" payments. "Extraordinary" would be like Enron where the execs give each other big payments for something or other. Besides, can you imagine the headlines if the SEC were trying to deny severance to ordinary workers? Even Harvey Pitt isn't *that* dumb (I think)."
It's already tomorrow in Australia and they're thinking ahead. If the American economic system crumbles, Australians think they'd be the next to go.
The vultures are circling WorldCom's assets. The former owners of OzEmail are considering buying it back from WorldCom, to which they sold it to for $520 million (Australian) in 1999.
CNN's WorldCom wrap-up.
Will Bernies Ebbers testify? That's a good question. A better question is whether Bernie will eventually end up in jail.
Sidgmore's letter to Bush.

Friday June 28, 2002 @ 1:06 PM EDT
The house that WorldCom built.
WorldCom's N.C. workers wait to find out whether they still have jobs.
And it begins.... Look for more companies to "come clean" about their finances in the near future. The first... Battered Xerox, which today said it would restate five years of results and reclassify $6.4 billion in revenues.
Sidgmore sends letter to President Bush as Dubya prepares speech on corporate reforms.
Inside the corporate mess that is WorldCom, the top tier of executives created an odd culture. This USA Today report includes some interesting tales, like the time Sidgmore tried to acquire wireless firm Nextel.
Only about 100 workers at WorldCom's Clinton, MS headquarters will be laid off.
In my hometown though, it's a different story. About 1,900 people will lose their jobs in the D.C. area, corporate home of MCI and UUNET.
Thursday June 27, 2002 @ 7:12 PM EDT
A congressional committee subpoenaed executives from WorldCom today. Current CEO John Sidgmore, former CEO Bernie Ebbers, fired CFO Scott Sullivan and Salomon Smith Barney crap-alyst Jack Grubman lead an all-star roster of white (collar) suspect criminals scheduled to appear oin July 8. Actually, I honestly think Sidgmore is in the clear. Not one WorldCom employee has ventured to speak ill of him and I think he's simply in a terrible, terrible position.
At the same time, SEC Chairman Harvey Pitt, who has basically done nothing during his time in charge, was busy telling Fox News that he.... Oh, I don't know, government officials mouthing off about playing hardball with corporate executives is old news. Shut up and do something Harvey.

Thursday June 27, 2002 @ 6:22 PM EDT
CNBC is reporting that WorldCom and the SEC are in talks to settle the fraud charges. The SEC is reportedly being very cooperative, as is WorldCom of course. One reason, and you better believe this is why it was in the lawsuit, is that the SEC's suit (a securities fraud suit actually) prohibits WorldCom from handing out severance. And tomorrow is the day that WorldCom starts firing 17,000 employees.

Thursday June 27, 2002 @ 5:52 PM EDT
Programming note... I'll be on KPHN 1190 AM in Kansas City tomorrow afternoon at 4:10 PM CDT discussing WorldCom and Sprint. I've appeared on the station before and it was fun. KC is the home of Sprint if anyone is wondering.
This is when it pays to have smart readers. In "The Latest Corporate Scandal Is Stunning, Vast and Simple," Kurt Eichenwald and Simon Romero of The New York Times break down what happened at WorldCom. As the title says... it was stunning, vast and simple. It comes off not so much as a corporate conspiracy, but horrendous decision making. "[WorldCom CFO] Mr. Sullivan explained that what he had done, according to a person who has been briefed on Mr. Sullivan's explanation, was make a judgment call. He believed that the expenses were an investment in telecommunication line capacity, which would provide increasing revenue in future quarters. Therefore, he reasoned, it was appropriate to defer expenses to future quarters," they write. Free registration is required, I suggest you read the article.
Ken Li at TheStreet.com says that EBITDA are the new scarlet letters. The first time I heard the term "EBITDA" I was working at Primedia, temping in their international business development department, and my boss kept saying, "I need you to run this EBITDA figures." I didn't have a clue what the guy was talking about. Disclosure: I am not to blame for Primedia's piss poor stock price.
A reader, vastly more intelligent than me, and that's no joke, writes, "As a suggestion, I would recommend that you keep a running list of the $ amount institutions admit to having lost on Worldcom. I find it very telling that Calpers admits to having lost more than $500mm, NY State Pensions about $300, etc. These institutions were not typical buyers of the bank debt that so much of the press has focused on so far. The losses to government sponsored pension funds have to have been large, primarily because Worldcom until May was an investment grade credit. I can almost guarantee you that the investment process at most of the funds left them holding the longer term issues. While the equity losses are large, the equity only went from the teens to effectively zero. The bond losses went from investment grade area (>85%) to effectively 15% of face value. If I remember correctly, that means equity lost about $10-15B, while the bond holders lost more than $20B. It is the wrath of the investment grade bondholders that will be the real thrust of the losses story."
A WorldCom employee writes, "Dude, this place is WHACKED! As always lately...if it were not for you, and some message boards, the employees here would be IN THE DARK!!! The Severance dealio is a SLAP BEYOND ALL SLAPS in the faces of people here. Many were just hangin' 10 seeing if they would get laid off just for that 'safety net'. They would have jumped ship already, but now it's kinda late for this area. NOVA. I saw people crying over it...we're talking calls to spouses to sell the house kinda dealio. Anyway...just wanted you to know that it really is a mess in here....hope it all washes out somehow!" So friggin' sad... because of the actions of a few, many will suffer.

Thursday June 27, 2002 @ 3:40 PM EDT
Reuters reports that WorldCom has hired The Blackstone Group, a New York-based investment and financial advisory firm. Blackstone recently acquired a majority interest in Columbia House, the AOL Time Warner-Sony discount music and film seller joint venture. The firm's Restructuring and Reorganization Advisory Group has worked with companies such as Dow Corning, Macy's, Montgomery Ward, Xerox and, of course, Enron and Global Crossing.

Thursday June 27, 2002 @ 3:10 PM EDT
I've posted the Securities & Exchange Commission lawsuit that was filed against WorldCom yesterday.
Inevitable fallout... radio station conglomerate Clear Channel and General Motors hit by accounting irregularity rumors, according to Briefing.com's InPlay. Both companies strongly deny rumors and GM says it's looking for the source. Some bad mojo working on Wall St.

Thursday June 27, 2002 @ 2:32 PM EDT
WorldCom employees are EXTREMELY upset because of the Securities & Exchange Commission lawsuit against WorldCom. Why? This passage in the suit, which seeks an injunction against the company; "Prohibiting WorldCom and its affiliates from making any extraordinary payments to any present or former affiliate, or officer, director, or employee of WorldCom, or its affiliates, including but not limited to any severance payments, bonus payments, or indemnification payments." I left a message for the S.E.C. people and I'm currently waiting for a reply.
On that note, a WorldCom employee reports to me, "Supposedly, there were packages for the "working slobs" - approved last week, while "the list" was closed on Monday with regards to "who shall live and who shall die".
I mentioned earlier that WorldCom is using the "we're important to national security" line in an effort to keep clients and appease employees. CNN spokes to The Pentagon and got the skinny.

Thursday June 27, 2002 @ 2:11 PM EDT
I like smart people. And I like people who take a serious interest in business. Robert Lee is a businessman turned serious investor who pummels writers, editors and politicians with sharp criticisms. One piece he sent out last I decided to publish. In his article, Lee says that the media has misidentified the accounting problems at WorldCom. "Cash Flow is NOT EBITDA. Cash flow is simply the amount by which the cash goes up or down in a given period. There are two ways to affect cash. You write a check or you receive a check. EBITDA is in my mind a minimally valuable parameter. Because it is so misunderstood by the lay public it should not be published," Lee writes.
Sweet, been waiting for this. The Miami Herald profiles fired WorldCom CFO Scott Sullivan. "In an alumni magazine published by Oswego State University in New York where Sullivan graduated in 1983 summa cum laude with majors in business administration and accounting, he was described as the 'master of the mega merger,'" Beatrice E. Garcia reports.
The Philadelphia Inquire meanwhile ponders whether there are any white hats left in Corporate America? What's up with the cowboy references!?
The Chicago Sun-Times apparently didn't think WorldCom was frontpage news.
Still no official press release from Mississippi Senator and Republican Leader Trent Lott.

Thursday June 27, 2002 @ 12:18 PM EDT
A check of the online mags brings dissapointed. News Max, an ultra-conservative rag (and that's being nice) has only a wire rehash of the story, concentrating instead on the Pledge of Allegiance controversy. Salon doesn't seem to be offering any original coverage, but there's a good Associated Press story quoting Treasury Secretary Paul O'Neill, ""I think we've got to prosecute people to the full extent of the law. In some cases we need to strengthen the law" so the government can prevent unscrupulous executives from looting their companies," O'Neill said. Over at Slate, Daniel Gross chimed in with a good article explaining the accounting tricks that WorldCom used. Again though, they're concentrating on the Pledge news, which seems a bit absurd considering the actual impact of the court's decision is so minimal.
Mike Cassidy from The San Jose Mercury News, not to be confused with David Cassidy or Sean Cassidy for that matter, says WorldCom is number one when it comes to sleaze. "For a while, Enron looked unbeatable in the crook department. Paper shredding, whistle blowing, life-savings collapsing, congressional investigating. And Global Crossing added a nice high-tech element. Then there was Tyco International, which gave us a rich chief executive who was such a cheapskate that he allegedly phonied up invoices to cheat New York out of sales tax on Monets and Renoirs he bought for his home," Cassidy writes. You know where this going.
Somehow the BBC's coverage of WorldCom gets the number one nod on Google with the search worldcom scandal.
At Cassidy's online home SiliconValley.com, John Paczkowski has some kind words for As The WorldCom Turns.

Thursday June 27, 2002 @ 11:16 AM EDT
To quote Steve Winwood, "While you see a chance you take it." Without mentioning WorldCom specifically, SBC busted out with a funny press release, "SBC Family Of Companies Ready To Assist Consumers, Businesses Concerned About Industry Turmoil."
Down in Mississippi people seemed genuinely shocked that a local company may end up being the biggest bust in business history. "WorldCom was something I and many others were very proud of," a local shareholder told The Clarion-Ledger. The paper also a good archive of WorldCom related stories.
USA Today says WorldCom is in a death spiral. That's not exactly true because there is such thing as "death spiral financing" and the company isn't going to get that.
Business Week says that WorldCom's demise is opening a door for AT&T. But with rumors that AT&T is going to get booted from the Dow (the 30 that makes up the average), does it matter much? AT&T is easily the lowest valued stock on the average and the company is being broken up further with the AT&T Broadband split. Dare I mention there have been recent calls for the head of C. Michael Armstrong? Nonetheless, a WorldCom collapse could mean new corporate customers for AT&T. "The result could be a cumulative $3 billion increase in revenue over the next four years for AT&T, which is expected to have $26 billion in revenue this year," BW's Jane Black writes.

Thursday June 27, 2002 @ 10:29 AM EDT
"WorldCom Collapes Would Be Biggest," so say the Association Press. Notice at the end of the article they've managed to drudge up Ebbers' comments from his April 29 interview with WLBT. Oh Bernie, what have you done?
Web-hosting firm Digex, which is majority-owned by WorldCom, said it will cut 86 jobs, or 7 percent of its workforce. Ok, no seven percent solution jokes. Digex recently overhauled its front office and er, I don't know, is a crappy little company.
Imagine this; Andersen should have caught the cooked books. Janet Whitman from Dow Jones Newswires reports that WorldCom's accounting tricks weren't sophisticated and should have been caught by Andersen and WorldCom executives. Agreed, but doesn't that say something about WorldCom's executive team (the Ebbers' team at least) and the Audit Committee if it took five quarters to turn up evidence of fraud? ""As far as I'm concerned, the whole system must have broken down," Robert Howell, a visiting professor at the Tuck School of Business at Dartmouth College told Whitman.
Showing their fondness for America's Wild West, the Brits at The Economist say that "Another Cowboy Bites The Dust." Not sure what Freddie Mercury would think, or John Wayne for that matter. "One person the SEC will want to talk to is Mr Ebbers, who was often to be seen in his cowboy boots and stetson hat. He was under pressure to raise WorldCom’s sagging share price. Mr Ebbers owes WorldCom over $400m, which he borrowed to bet on WorldCom shares. These loans are secured on Mr Ebbers’s personal assets, including a yacht-sales company, a soyabean farm, and nearly 27m WorldCom shares. A soyabean farm!?

Thursday June 27, 2002 @ 2:55 AM EDT
I penned two stories about WorldCom for my website today... "Fear And Loathing At WorldCom" takes a look at how employees and competitors reacted to the news. "In the immortal words of Englebert Humperdink... please release me, let me go, for I don't love you anymore," another WorldCom employee said, laughing because, "what else can I do?" a WorldCom employee told me.
"WorldCom: The Day After" dishes some dirt about what was being said on some conference calls yesterday and gives some more ink to people's reactions. "WorldCom is also the only carrier in Afghanistan, something that the 17,000 employees facing elimination could probably care less about. But those 17,000 job cuts will hit hardest among the company's contractors and at their construction center, according to an internal document obtained by Dotcom Scoop," I wrote.
Hmmm, a bit of editing for length here... my story from today's New York Post was cut down a bit, so I rewrote it as the above mentioned "Fear And Loathing At WorldCom."
WorldCom is understandably concerned that employees of the company will paint a bleak picture. At their Cary, North Carolina facility I've been told the company ran the media off the premises and informed employees not to speak to the media. I'm sure there's an all-hands directive to shut up, but I have no evidence because I keep getting emails and calls from WorldCom people (doh!). Here's an actual news report about it.
WorldCom President and CEO John Sidgmore talks to the camera (WARNING: link opens a Real Video Player)
If nothing else, Sprint gets an award for the most long-winded press release title ever, "Sprint Expresses Dismay at Continuing Reports of Accounting Irregularities in Telecom Industry; Reaffirms its Accounting is Complete and Accurate."
First citation for As The WorldCom Turns, woo-hoo!
Ah, readers are dredging up the past... The consumer complaints apparently were flying against MCI WorldCom's wireless service down in North Carolina last month. Gotta love investigative reporting done by local television stations. The Fox affiliate in NYC just got some people their dry cleaning back.
A field guide to bamboozling, courtesy of Fortune.
Here we go, this what I've been waiting for; the political connections. The Washington Post reports that as recently as a week ago WorldCom was playing up to the boys in D.C. Last week the company donated $100,000 for a Republican fundraiser that featured an appearance by President George W. Bush. The company donated over $1 million combined to both parties since the beginning of 2000, including $10,000 for Attorney General John Ashcroft's Senatorial run. Welcome to Enron Redux.
Washington Post again, the paper has a good FAQ for consumers who have questions about what will happen to telecom services in light of what's occured.
Ed. note... Because MCI and UUNET are headquartered in the D.C. area, The Washington Post has some excellent coverage. I suggest reading through the stories as I don't want to link every story on their site.
Good to see Simon Romero getting the lead at The New York Times. Romero penned a fairly coprehensive review of yesterday's events. The big issue now is whether WorldCom's lenders will come to its rescue. It looks like the answer is no. "We believe WorldCom's lead banks may refuse to honor additional requests to draw down credit lines and that negotiations over new, securitized credit lines are likely to falter," said Dan Reingold, an analyst at Credit Suisse First Boston. "This, of course, means bankruptcy is now a distinct and near-term possibility." (registration required)
Also at The Times, Floyd Norris says "Many people on Wall Street are wondering when investors will say enough is enough and pull their money out of stocks and mutual funds." That's the $4 billion question Floyd. (registration required)

Wednesday June 26, 2002 @ 9:28 PM EDT
Early word is that WorldCom will dominate covers of weekly news mags next week... Newsweek, Time, U.S. News & World Report. Not surprising, though I bet they're all pissed this went down on a Tuesday.
Want a good indicator of how corporate bigshots really act? Eighty percent of them cheat at golf, so says Fox News' Neil Cavuto. "But here's the kicker: virtually all consider themselves to be honest in business. I guess they're maniacs on the links," Cavuto writes.
My friend Ken "Fast & Furious" Li gives a nice rundown of the WorldCom ripple effect on other stocks. The photo they have of Ken makes him look more menacing than he actually appears in real life.
Sweet coverage of the mess from the folks at CNBC and MSNBC. A good interactive portfolio of data with video of CNBC's David Faber breaking the story yesterday, Salomon analyst Jack Grubman getting cornered, a WorldCom profile and a breakdown of how the company cooked its' books. Job well done.
More employee venom. "Glad to see them fall. Worked with this company in [location removed] for almost three years and they all lie to get what they want. You have to kiss the manager's ass plus kiss all of their friends ass that they hire. WorldCom like people they can control and anyone that doen't want to loose their jobs best always have a yes in their mouth. Never believe what they say, because they all will look you straight in the eye when trying to convince you a lie is the truth," a recently laid off WorldCom-er told Dotcom Scoop.
WLBT in Jackson, MS says it wasn't able to talk to any WorldCom employees outside the company's headquarters. The NBC affiliate was able to talk to some down-on-their-luck shareholders though. Oddly, the station refers to the accounting scandal as a "bookkeeping mishap."
CNET News.com has slapped together a page with links to their WorldCom coverage. I'm too lazy to read everything, but take a gander.
Good coverage of Washington's reaction to the WorldCom mess from The Houston Chronicle, with help from AP and Reuters. ""Until somebody goes to jail I'm not sure these people are going to get the message," Arizona Senator John McCain said today during a hearing today regarding NY AG Spitzer's investigation into Wall St. analysts.
Reuters runs down a Chronology of WorldCom Events. Ah... how I long for LDDS days.
The Motley Fool's take on WorldCom... it's World-Con baby.
California Public Employees' Retirement System (CalPERS) said it stands to have $565 million in unrealized losses because of WorldCom. Nonetheless, the demise of WorldCom will have a minimal impact on CalPERS $150 billion portfolio.
TheStreet.com is providing some excellent coverage, but all of Jim Cramer's stuff is for subscribers only. Regardless, Rebecca Byrne breaks it all down in "EBITDA: Anatomy of an Accounting Gimmick." For the layman, Byrne writes, "Simply put, the company shifted expenses out of its income statement and into its cash-flow statement -- a segment that far fewer investors actually scrutinize."

Wednesday June 26, 2002 @ 6:45 PM EDT
WorldCom stock changes ticker symbol tomorrow to WCOME (was previously WCOM). No word on when the stock will begin trading again though.
MarketWatch reports that the SEC has filed fraud charges against WorldCom. Charges filed in Federal Court in New York and SEC Chairman Harvey Pitt says he's moving to prevent company from destroying documents.
New York State Comptroller told local news that the state lost over $200 million on WorldCom, biggest single loss on an investment ever (I assume this is in the state's pension fund, not sure).
Jack Grubman, the Salomon Smith Barney analyst who cheerled the hell out of WorldCom stock, brushes away CNBC reporter after they corner him on the street. Says he was surprised by the news. Grubman touted the stock as a "buy" as recent as two months ago.
National newscast plays up WorldCom story behind court decision ruling the Pledge of Allegiance is unconstitutional.
Lord, the crap you find on the Internet. In "How Government Bureaucrats Helped Sink WorldCom," Donald Luskin argues that the government killed WorldCom. This article was published last week, so no telling if Luskin has changed his mind. Luskin is one of those smarmy hedgefund guys. At least he didn't go to Harvard... he's a Yaley.

Wednesday June 26, 2002 @ 5:23 PM EDT
As I mentioned in a previous article, WorldCom CEO John Sidgmore cancelled a scheduled online chat with The Washington Post last week. I think we now know why. Sidgmore was profiled by The Post's Washington Techway Magazine a few weeks ago in an article titled "WorldCom's Last Hope." That last hope may have just been flushed down the shitter.
Dan Ackman from Forbes gets a little sarcastic in "The WorldCom We Hardly Knew." "What's an accounting scandal these days without Arthur Andersen?" Ackman writes.
Not much action on eBay yet when it comes to WorldCom branded junk. Scripophily.com has busted out WorldCom stock certificates. Scripophily is the practice of collecting useless pieces of paper.
Local reaction in Mississippi to the WorldCom news.
More local reaction.

Wednesday June 26, 2002 @ 4:08 PM EDT
As I write this WorldCom CEO John Sidgmore is speaking to all WorldCom employees via a video conference call. I'll provide details when they're available.
Bob Hiler at Beyond Value Investing, a service of Corante, has written a comprehensive and brilliant piece about WorldCom entitled The Corporate Pyramid Scheme: How WorldCom Lost Billions in the Biggest Pyramid Scheme of All Time." "As long as customers are paying real money to a company, a pyramid is unlikely to emerge. All that changed with the birth of a new product called Dark Fiber," Hiler writes. This is a must read for anyone trying to understand just what the hell has transpired.

Wednesday June 26, 2002 @ 3:47 PM EDT
Here's something interesting pointed out to me by a longtime reader. A message in The WorldCom Employee Lounge newsgroup posted on Monday details some problems at WorldCom's UUNET IP NOC (network operations center?), basically the backbone for a hugh amount of Internet traffic. "The waste of millions of dollars on bogus NOC tools. a. The newest money pit is called Espresso. Which is supposed to be The latest tool to hit the NOC, replacing a home grown tool created by Ann Arbor called Rover. This tool will do little to improve network monitoring because Espresso is simply Rover, but with colored alerts," is my favorite passage from the posting.

Wednesday June 26, 2002 @ 3:15 PM EDT
Getting tipped off on some conference calls taking place inside WorldCom today. I'll let you know if there's anything of value in any of them. Most of them involve rehashing yesterday's announcement, cheerleading and providing pointers on how to handle damage control with corporate clients.
MarketWatch.com's Jeffrey Bartash gives some insight into the relationship between ousted CEO Ebbers and fired CFO Scott Sullivan. "Ebbers, 60, and Sullivan, 40, made an odd pair. The older Ebbers, a Canadian native who ended up in Mississippi on a basketball scholarship, liked to hang out on his farm and was a devout Christian. The much-younger Sullivan, who attended college in upstate New York, liked to spend time on the golf course or at high-profile sports events such as the Super Bowl or the Final Four," Bartash writes.
A couple of recent articles I penned on WorldCom for The New York Post. From May 27, this article talks about some missing documents regarding WorldCom in the Metricom bankruptcy. A good ten days before WorldCom announced its previous workforce reduction, I gave readers the inside word on what was about to happen. An April 29 article I wrote for this site entitled The End Of An Error talked about the resignation of WorldCom CEO Bernie Ebbers and includes the email new CEO John Sidgmore sent to employees on his first day on the new job. More previous coverage can be found in the Rumor Mongering Archive.

Wednesday June 26, 2002 @ 2:45 PM EDT
Quick notes... There is a rumor circulating that WorldCom is already in debtor-in-possession talks, which would signal a bankruptcy filing is imminent; trading of WorldCom and MCI (WorldCom's long-distance unit) stock have been halted; 17,000 jobs will be cut; massive accounting fraud results in almost $4 billion mistated cash flow; CFO fired and Controller resigned.
"My honest reaction is surprised that they didnt give us a heads up before it hit the press but then again, it's [WorldCom and nothing they do surprises me any longer. I hope to be gone by Friday because I dont want to be left at this shell of the company just to take on more tasks to cover for everyone that just got fired. That is my honest reaction as a WorldCom employee. I'd rather be unemployed and handed the pathetic package they'll be offering than working for them any longer," a WorldCom employee told Dotcom Scoop. I'll have a more extensive reaction piece in tomorrow's New York Post.
In an email to WorldCom employees, CEO John Sidgmore did little to ease tensions. Part of restoring that confidence means being forthright about communicating problems when we discover them and proactive in correcting them. This is the only way we will affirm our credibility in the market," Sidgmore wrote. Yeah, well, what's up employees' pensions, 401(k) and such?
After the shit hit the fan yesterday, WorldCom employees expressed a variety of attitudes. "In all honesty, this isn't very shocking. Some people in this company, or I should say some people who used to work for this company, are capable of anything," an executive told Dotcom Scoop.
"The profit squeeze was in every line of Worldcom's business. Long distance retail had massive marketing costs to keep the volume up - all those annoying telemarketers are expensive, and the customer churn brutal. Internet backbone prices have gone down so much companies like Global Crossing and KPNQwest failed miserably, and it's hard to believe WorldCom isn't losing heavily there. They invested $5B in Digix last year, a web hosting company similar the now bankrupt Exodus. The large corporate market has become so unprofitable that Ivan Seidenberg says Verizon is backing out away from it. AT&T's Armstrong claims Qwest is bidding below cost. MCI (and AT&T) have to match their offers or lose the customer in many cases - there's no margin in that business either. Every part of WorldCom had profit problems," Dave Burstein wrote in a Telecom Insider Extra newsletter for DSL Prime subscribers.
In Canada for G-8 meetings, President Bush said the SEC and DOJ will investigate WorldCom. "We've had too many cases of people abusing their responsibilities and people just need to know that the SEC is on it, our government is on it, and Arthur Andersen has been prosecuted. We will pursue, within our laws, those who are irresponsible," Bush said.
WLBT TV in Jackson, Mississippi (WorldCom is headquarted in Clinton, MS) conducted an interview with WorldCom CEO Bernie Ebbers the day he was ousted from the company in April. Ebbers claim that the company's accounting was "absolutely clean" may come back to bite him in the ass. "Our accounting, to the best of my knowledge, is absolutely clean. That doesn't mean you don't get painted with some of that brush. Did WorldCom ever use Andersen as an accounting firm? Oh, yes; we still do. Is that a factor? It may be. You know the amazing thing about that, Bert? Anderson has 85,000 employees, and I would say 84,000 of them are the highest quality employees you could find," Ebbers told WLBT's Bert Case.
According to Jim Seymour from TheStreet.com, Tellabs, Ciena, Sycamore and Juniper can expect to feel WorldCom's pain.
WorldCom stock message board on Yahoo! is going insane.
Securities & Exchange Commission says "The public can be assured that we are actively investigating these and other events relating to the veracity of WorldCom's financial statements and disclosures." We've heard this before.
Dan Gillmor of The San Jose Mercury News writes, "The WorldCom situation is horrifying." Gillmor says he's losing faith and that individual investors feel the situation in Corporate America and Wall St. is rigged.
Winner of The Most Obvious Quote Award: Telecom analyst Jeff Kagan, "It's going to be a tough day for WorldCom," Kagan told The New York Post.
The entity known as Andersen, which audited WorldCom (as well as Enron, Global Crossing and Qwest), has not yet issued a press statement regarding their latest mess.
WorldCom's official announcement on Tuesday confirmed the news that CNBC broke. "WorldCom, Inc. (Nasdaq: WCOM, MCIT) today announced it intends to restate its financial statements for 2001 and the first quarter of 2002. As a result of an internal audit of the company’s capital expenditure accounting, it was determined that certain transfers from line cost expenses to capital accounts during this period were not made in accordance with generally accepted accounting principles (GAAP)," the company said.