30 April 2002 Bernie Ebbers has resigned as CEO of telecoms company WorldCom over the company’s battered stock price and a controversial personal loan he took from the company.
Ebbers’ $366 million (€406.3m) loan is just one of a number of WorldCom practices currently being investigated by the US Securities and Exchange Commission (SEC). The SEC is also examining disputed sales and related commissions; a charge the company took in 2000 relating to wholesale customers; and accounting practices relating to many of WorldCom’s acquisitions.
The ignominious departure of the colourful Ebbers is in sharp contrast to the meteoric rise of WorldCom during the 1990s. CEO since 1985, Ebbers became an icon of the telecoms industry for transforming WorldCom from a small regional provider to one of the largest long-distance voice and data network providers in the US.
But since its stock price peaked at $64.50 (€71.6) in June 1999, it has been downhill for WorldCom. At the close of trading on 29 April 2002, its share price was floundering at just $2.35 (€2.61), valuing the company at $6.9 billion (€7.66bn).
Worse still, with debts of around $28 billion (€31.1bn) and moribund growth, it may soon be forced to file for chapter 11 bankruptcy protection. The debt was built up as a result of WorldCom’s frenzied acquisition spree during the 1990s, culminating in the snatching of rival MCI from under the nose of BT in 1998 for $40 billion (€44.4bn).
An even more ambitious $129 billion (€143.2bn) takeover of Sprint was blocked by competition authorities in both the US and the European Union in July 2000.
Replacing Ebbers is John Sidgmore, WorldCom’s vice chairman and former head of the company’s Internet infrastructure division, UUNet. Sidgmore faces an unenviable task of restoring public and investor confidence in WorldCom.