WorldCom Inc., as it tries to emerge from bankruptcy under the MCI brand, on Wednesday named a former executive of ADC Telecommunications
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
“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
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
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.