Between 1999 to 2002, WorldCom overstated its pretax income by at least $7 billion.
The largest deliberate miscalculation in the history.
Write down 82 billion of its reports assets.
Stock value from $180 to nearly worthless
Employees lost job, and worthless retirement account
The bankruptcy influence 20 million retail customer.
On government contracts, affect 80 million social security beneficiaries.
Line-cost expenses are a significant cost for all long-distance carriers
The LDDS started with 650 thousands, accumulated 1.5 million in debt, the company lacked the technical ...view middle of the document...
In 1989, LDDS became a public company through a merger with Advantage Companies, a company that was already trading on Nasdaq. By the end of 1993, LDDS was the fourth-largest long-distance carrier in the United States. After a shareholder vote in May 1995, the company officially became known as WorldCom.
In 1996, WorldCom entered the local service market by purchasing MFS Communications Company, Inc., gave WorldCom a substantial international presence and a large ownership stake in the world’s Internet backbone
In 1997, WorldCom used its highly valued stock to outbid British Telephone and GTE (then the nation’s second-largest local phone company) to acquire MCI, the nation’s second-largest long-distance company. The $42 billion price represented, at the time, the largest takeover in U.S. history.
WorldCom’s integrated service packages and its Internet strengths gave it an advantage over its major competitors, AT&T and Sprint. Analysts hailed Ebbers and Scott Sullivan, the CFO who engineered the MCI merger, as industry leaders.
In 1999, WorldCom attempted to acquire Sprint, but the U.S. Justice Department, in July 2000, refused to allow the merger on terms that were acceptable to the two companies.
WorldCom executives realized that large- scale mergers were no longer a viable means of expanding the business. after the turndown of the Sprint merger, “Ebbers appeared to lack a strategic sense of direction, and the Company began drifting.