Telecom giant WorldCom in shakeup as woes mount

John Porretto

Tuesday, April 30, 2002 | 9:50 a.m.

CLINTON, Miss. -- Bernard J. Ebbers, who built WorldCom Inc. into a global telecommunications giant but then 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 said today that Vice Chairman John Sidgmore would succeed Ebbers in both positions. Bert Roberts remains chairman.

Sidgmore has served as vice chairman since 1996 and as the company's chief operations officer from December 1996 to September 1998.

WorldCom, one of the darlings of Wall Street a few years ago, has seen investors turn against it in recent months amid concerns about the company's $28 billion in debt and an ongoing Securities and Exchange Commission investigation into loan and accounting practices.

Its long-distance business, the nation's second largest after AT&T Corp., has also come under pressure from industrywide price discounting.

WorldCom's stock, which has lost some 80 percent of its value this year, closed Monday at $2.35, down 92 cents, on the Nasdaq Stock Market. It fell 12 cents today.

It traded at a high of $64.50 in June 1999.

"We are an exceptional company and a global leader with few peers," Sidgmore said in a statement. "While our industry has been buffeted by the economic downturn in recent months, WorldCom is well positioned to capitalize on an economic upturn."

Eight equity analysts downgraded WorldCom shares last week, days after the company slashed its revenue and profit forecasts for 2002.

At the same time, bond ratings agencies Moody's Investors Service, Standard & Poor's and Fitch all cut their long-term credit ratings on WorldCom's debt.

On Thursday, WorldCom's first-quarter earnings report showed profits for the company's core businesses plunged 66 percent as corporate clients reduced spending.

Declining sales attributed to the weak economy have raised questions about whether WorldCom will be able to meet its billions in financial obligations in the next few years.

In March, two WorldCom stockholders sued the company's board over $375 million in loans that the company has made to Ebbers. Ebbers has said he has enough personal assets to cover the loans.

In today's statement announcing the leadership changes, company officials praised Ebbers for creating one of the largest communications providers in the world.

"Thanks to Bernie, WorldCom is an industry leader with the most valuable customers, assets and employees in the communications industry today," Roberts said.