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WorldCom/MCI Nabs Seasoned Telecom Exec

WorldCom Inc., as it tries to emerge from bankruptcy under the MCI brand, on Wednesday named a former executive of ADC Telecommunications and AT&T as its new president and chief operating officer.

Richard R. Roscitt will takeover a variety of top management duties from the company's chairman and chief executive Michael D. Capellas, who is focusing on the company's attempt to get out of bankruptcy.

Roscitt is expected to be in charge of the MCI's sales, product development and network operations, and will attempt to restore credibility and confidence in the company's staff and product lines.

Capellas will be giving up his president's title to Roscitt, who will be starting his new position on September 1. The company's business, consumer, international and network operations will be reporting directly to Roscitt, a significant removal of control that Capellas has had in recent months.

But while Roscitt has a host of new responsibilities, the company is under siege on a variety of fronts. Beyond the complicated nature of restructuring the company to comply with the terms of the judge overseeing WorldCom's potential emergence from bankruptcy, the firm continues to be dogged on a number of other fronts.

WorldCom is in the process of settling securities fraud charges with the Securities and Exchange Commission of $750 million, as part of its admission to close to $11 billion in its nefarious accounting schemes.

But even if WorldCom is successful in emerging from bankruptcy before the end of the year, it still faces an uphill in its marketing and sales strategy. The company has seen its credibility severely damaged from its numerous accounting, operations and ethics scandals.

In filings with the SEC this week, WorldCom stated that it may lose more than $1 billion in new sales and $250 million in net income over the next three years, as a result of being banned from doing any business with the U.S. government, until at least next July. And that admission comes after the company had already trimmed its revenue forecast over the next three years by $4.2 billion.

Beyond the General Services Administration suspending any contracts to WorldCom by the government, both the Department of Justice and Federal Communications Commission are conducting investigations, relating to charges by its competitors that the company skirted paying fees to local phone companies through a sophisticated re-routing of long distance calls. Those investigations are ongoing.

And it has come to light, the Federal Bureau of Investigation is involved in a probe of MCI saying Tuesday it is encouraging victims and witnesses to come forward with information relating to charges it disguised the origin of long distance calls, in an effort to avoid paying fees to local telephone companies.

"The FBI has conducted numerous interviews regarding these allegations, and additional information is sought from individuals and corporate entities," the FBI said in a statement.

Thus, Roscitt, Capellas and their entire upper management team have an uphill battle restoring the credibility and financial stability of the company, not to mention responding to a variety of serious government investigations.

Roscitt comes from ADC Telecommunications, where he was the chairman and CEO of the struggling broadband telecom equipment provider. ADC has seen its shares fall from close to $50 in mid-2000 to their current level slightly over $2 per share. However, Roscitt wasn't appointed CEO until February 2001, and under his management the company shed 15,000 jobs as ADC battled through the ongoing telecom equipment slump.

Prior to coming to ADC, Roscitt was a 28-year veteran of AT&T, where his titles included the president of AT&T Business, the company's corporate voice and data division, the largest unit within the massive telecom company.

As Capellas tries to remake WorldCom, he has made several other upper management changes, including the naming of Anastasia Kelly, the company's new general counsel and Bob Blakely, the new chief financial officer.

Meanwhile, at ADC, Roscitt is being replaced by the company's CFO Robert Switz, who will be the company's new president and chief executive officer.