Bernard J. Ebbers, who built WorldCom Inc. into a global telecommunications giant saw its fortunes and stock price crumble amid fierce industry competition and questions about the company's finances, has resigned as chief executive and president.
WorldCom admitted June 25 that it had falsely booked $3.85 billion in expenses to make it appear more profitable. The same day, the company fired chief financial officer Scott Sullivan, who was later accused by company auditor Arthur Andersen of withholding crucial information about WorldCom's bookkeeping.
The bankruptcy is twice as large as Enron's record-setting filing in December and four times as big as Global Crossing's in January. Worldcom reported more than $100 billion in assets at the end of March but is burdened by $30 billion in debt.
Even before the hidden expenses were exposed, WorldCom was struggling. Its stock traded as high as $64.50 in mid-1999. But shares of WorldCom and other telecommunications companies have slid ever since as the dot-com bubble burst and other market forces caused an industrywide implosion.
CLINTON, Miss., July 21 /PRNewswire-FirstCall/ -- WorldCom, Inc. today announced that WorldCom and substantially all of its active U.S. subsidiaries filed voluntary petitions for reorganization under Chapter 11 of the U.S. Bankruptcy Code in the United States Bankruptcy Court for the Southern District of New York. Chapter 11 allows a company to continue operating in the ordinary course of business and to maximize recovery for the company's stakeholders. The filings will enable the company to continue to conduct business as usual while it develops a reorganization plan.
"Chapter 11 enables us to create the greatest possible value for our creditors, preserve jobs for our employees, continue to deliver top-quality service to our customers and maintain our role in America's national security," said John Sidgmore, president and chief executive officer of WorldCom. "We will use this time under reorganization to regain our financial health and focus, while operating with the highest integrity. We will emerge from Chapter 11 as quickly as possible and with our competitive spirit intact."
WorldCom currently employs more than 60,000 people in 65 countries and serves over 20 million residential and business customers. It also operates the world's largest Internet network.
WorldCom become the most heavily traded stock in a single day and during the day, 1.47 billion shares of WorldCom traded, at prices as high as 15 cents and as low as 5 cents.
The Telecom Disaster..!!
Documents from short-lived telecom companies are a contemporary commodity. With the introduction of the phone switching equipment, hundreds of start-up companies sold shares of their stock and millions of investors purchased these shares. But in the blink of an eye, many of these telecom companies went out of business. Importantly, most of the telecom shares were traded electronically and, thus, very few hard copy paper stock certificates were issued. Collectors of the limited number of issued certificate shares will have a rich return on their investment.
Additionally, a growing number of investors and collectors have expressed interest in obtaining the defunct shares as reminders of the roaring, heady days of the telecom bubble - and the mistakes made when it burst.
Therefore, these certificates are in very limited in supply and have become a collector's dream. We invite you to experience a piece of Internet history. Its significance will most certainly continue to increase as the current generation X-ers come to realize the value of this part of history.
