WorldCom, formerly known as the second largest long distance phone service, had taken its fall and officially took its final name on April 14, 2003.
This Company’s mission statement was to “Create a competitive advantage for WorldCom and contribute significantly to WorldCom's business success by promoting business practices that provide greater opportunity for a diverse supplier base. " Throughout WorldCom’s lively years, it had great growth through the buying out of other telecommunication companies, such as MCI Communications, Tier 1 ISP UUNET, and had a major part of the internet backbone.On November 10, 1997, this powerful company announced their 37 billion dollar merger, making it the largest in US history. WorldCom had almost become the nation’s top telecommunications provider if the Sprint merger had gone through.
This merger couldn’t go through because of the concerns the US Department of Justice had about the possible future monopoly. Although WorldCom had great strength through its time, it also had much weakness, mostly through bad decision making in the accounting department.In 2001, Ebbers made the first critical mistake. He convinced the board of directors to provide him with over 400 million dollars to cover his margin calls.
The board had much weakness by actually providing Ebbers with this substantial amount of money. I think that the well educated people on the board should have seen the great risk they were putting out on the whole corporation. From the beginning of 1999, to May of 2002, WorldCom had been hiding the declining earnings of the company by using fraudulent accounting methods.This posed a false picture of the financial growth, so that WorldCom’s stock would go up, when it should have really been going down. In June of 2002, some of the fraudulent accounting had been recognized, which resulted in the firing of Sullivan, the resignation of Myers, and the withdrawn audit opinion by Author Anderson for 2001. Shortly after, the SEC launched an investigation on this issue.
The total inflation of the company’s assets had been estimated to be $11 billion. The fall of a big corporation, like WorldCom, can make a great affect on that market economy.This poses an opportunity for a new company to step up, and take role for the loss of WorldCom. It was named MCI after the bankruptcy, and later bought out by Verizon in 2006.
The unethical employees of WorldCom were thrown out of the business world, resulting in an opportunity for new business people to get a chance. Many were left unemployed, without benefits, and left to take care of their families after this WorldCom scandal. At least the Sprint and WorldCom merger did not go through resulting in a monopoly, or else this whole market would have been in a heap of trouble.There are a couple of recommendations that I believe would work to keep the market up after a scandal such as this. First, at the fall of WorldCom, I would have proposed a bailout plan to get WorldCom back on their feet, but also fire any employees involved in the scandal, with possible legal trouble, and fill the position with new, well qualified people.
My other recommendation would be to have another big and wealthy corporation buy out WorldCom, so that it can start new and have sufficient monetary resources to see that it succeeds.Some may have problems with my first recommendation, simply by considering it to be socialism. I think when this many people’s careers and service are on the line, it is necessary for the government to step in, and pull them back up again, so that it will only affect everyone to a very small margin. There would be conflict with my second recommendation because it could be hard to find another corporation to fill the position.
Also, if someone does buy it out, it will be very tough for them to get it back to being successful.
