WorldCom, Inc. saw the end of an era Tuesday with the
announcement Bernard Ebbers, president and chief executive officer, is
resigning.
With the resignation comes a changing of the guard, as the data and
Internet arm takes precedence at the executive level, a sign of the
changing times for the long-distance and Internet provider. Long-distance
services in the MCI Group have been lagging for years now, while WorldCom’s
UUNet division continues to shine.
Replacing Ebbers is John Sidgmore, WorldCom board of directors vice
chairman and former UUNet chief, who doesn’t see WorldCom going insolvent
anytime soon.
In a conference call Tuesday morning, Sidgmore said he will take the next
30-60 days to determine which of the 75 WorldCom acquisitions made in the
past five years are considered essential to the carrier’s future growth.
“Those core growth assets may be invested in more heavily and the ones that
are not core
to us may be restructured or sold at some point, they’ll certainly get less
capital going forward,” he said.
While conducting his strategic review Sidgmore is putting everything on
hold, from adjusting the company’s capital expenditures for the year to
releasing a dividend check to shareholders.
Several investment firms are calling for a reduction to WorldCom’s capex
amount, $4.5 billion, this year to free up some money at the embattled
company. Sidgmore wouldn’t comment on whether he would listen to the
advice, saying only a decision would be made after the review was conducted
for all its business and financial operations.
Other executive-level changes include the promotion of Ronald Beaumont,
former WorldCom Group chief operating officer, to the position of COO for
the entire company. Scott Sullivan, chief financial officer, made the move
to executive vice president, in a nod to the financial difficulties the
company will need to overcome in the coming months.
Ebbers’ resignation comes after months of falling stock value exacerbated
by a Security & Exchange Commission (SEC) probe into personal loans
extended to him by the company to cover losses in his WorldCom stock, to
the tune of $366 million.
Once trading at $64, WorldCom opened for business Tuesday trading at $2.65.
Rumors say the resignation wasn’t completely voluntary, with reports saying
outside WorldCom directors were worried over the flap caused by Ebbers’
loans, prompting Bert Roberts, WorldCom chairman of the board, to replace him.
Ebbers helped found WorldCom back in 1985 and has been instrumental in the
company’s rise to one of the largest and most encompassing telecom
providers in the world.
