What happened to WorldCom stock?
According to The Wall Street Journal, when WorldCom granted Ebbers the loans, its stock had been trading around $24, but by the time of his resignation it is valued at less than $3 per share. On June 25, WorldCom admits that it had inflated its earnings by $3.8 billion -- the largest accounting fraud in history.
Why did WorldCom change its name to WorldCom?
At the LDDS annual meeting in May 1995, the company changes its name to WorldCom. The Telecommunications Act is designed to open up the telecom industry to greater competition by allowing the regional "Baby Bells" to enter the long-distance market if they open up their local monopolies to competition.
What are the returns on WorldCom investments?
According to a Wall Street Journal article on Feb. 29, 1996, WorldCom provided investors with returns of 57.3 percent a year over the previous 10 years.
What happened to WorldCom stock?
Rakoff said of WorldCom: "We have perhaps the largest accounting fraud in history, with the company's income overstated by an estimated $11 billion, its balance sheet overstated by more than $75 billion, and the loss to shareholders estimated at as much as $200 billion."
When did WorldCom stock drop?
The Start of WorldCom's Fraud Ebbers would accumulate over $1 billion in loans in which he offered his WorldCom holdings as collateral. As the stock began to fall in late 1999 and into 2000, Ebber's lenders were demanding that he sell some of his shares in order to pay back his loans.
Was WorldCom publicly traded?
The company became traded publicly as a corporation in 1989 as a result of a merger with Advantage Companies Inc. The company name was changed to LDDS WorldCom in 1995, and relocated to Clinton, Mississippi.
Is MCI WorldCom stock worth anything?
Investors who bought shares after WorldCom first acknowledged its massive fraud are out of luck. They get nothing.
How much did shareholders lose on WorldCom?
The plunge in WorldCom shares has cost investors upwards of $175 billion—nearly three times what was lost in the implosion of Enron.
What was the stock price of WorldCom before the scandal?
See full story. WorldCom's stock, which closed at 83 cents on Tuesday ahead of the news, sank as low as 9 cents in pre-market trading. In January, shares of WorldCom were trading at about $15 and during the bull market of the late 1990s peaked above $60.
What made WorldCom successful?
With a stock price that was high considering the company's earnings, WorldCom could acquire companies with lower price-earnings multiples, and because of simple math automatically increase its per-share earnings. The acquisition binge provided other benefits, according to former WorldCom employees and analysts.
What did WorldCom change their name to?
MCINEW YORK -- WorldCom Inc., the nation's second-largest long-distance carrier after AT&T Corp. , plans to change its name to MCI as early as Monday, people familiar with the company said.
What does WorldCom sell?
The MCI WorldCom division is the second largest long distance company in the United States (after AT&T), with a 45,000-mile nationwide fiber optic network, that provides local phone service in more than 100 markets and offers data, Internet, and other communications services.
Does AT&T own MCI?
Its MCI Mail, launched in 1983, was one of the first Email services and its MCI.net was an integral part of the Internet backbone. The company was acquired by WorldCom (later called MCI Inc.) in 1998.
What happened after WorldCom?
In the aftermath of WorldCom, Enron, and other corporate accounting scandals, Congress passed the Sarbanes-Oxley Act (SOX), a corporate governance law which, among other things, holds top executives personally liable for the accuracy of a company's financial statements.
How did WorldCom become successful?
With a stock price that was high considering the company's earnings, WorldCom could acquire companies with lower price-earnings multiples, and because of simple math automatically increase its per-share earnings. The acquisition binge provided other benefits, according to former WorldCom employees and analysts.
When did Ldds become WorldCom?
1995LDDS is renamed WorldCom in 1995. At the time of their first meeting, Grubman is working as a telecom analyst for PaineWebber. He is hired by Salomon Brothers in 1994 and initiates coverage of LDDS at Salomon in May 1995, rating the stock a "buy," and upgrading it to a "strong buy" in December 1996.
How much did WorldCom make in 2000?
WorldCom had originally reported a profit of a little over $4 billion for 2000. In reality:
Who was the CEO of WorldCom?
Meanwhile, Bernard Ebbers, the CEO of WorldCom at the time and now known as one of the most corrupt CEOs of all time, had used his shares of WorldCom as collateral for loans for his many other ventures and hobbies. Ebbers would accumulate over $1 billion in loans in which he offered his WorldCom holdings as collateral.
What Did WorldCom Actually Do?
The primary way that WorldCom overstated its profits was by counting certain costs as Capital Expenditures (CAPEX) instead of normal expenses . By considering expenses as CAPEX, the company was able to depreciate its costs over numerous years, instead of having to take the full charge in a single year. This allowed WorldCom to report higher profits.
How much money did Ebbers take from WorldCom?
In total, Ebbers would take over $400 million in loans from WorldCom, including $65 million just 7 months before the company would declare bankruptcy. By March 2002, the SEC was getting suspicious of WorldCom’s financial reports.
When did WorldCom fire Ebbers?
By the end of June 2002, internal auditors would brief WorldCom’s board on their findings. When CEO Ebbers had no evidence to dispute the charges, the board fired Ebbers and announced the next day that the company had overstated its profits by $3.8 billion over the previous 5 quarters.
Why did WorldCom's revenues decrease in 1999?
In 1999, WorldCom’s (and every other telecommunication company) was seeing declining revenues due to intense competition within the telecommunications industry.
When did the SEC surprise WorldCom?
On March 7th 2002, the same day that an internal auditor would receive a threat from Ebbers to halt her investigation into WorldCom’s books, the SEC would surprise the company with a request for more information on their business.
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What company did WorldCom buy?
In August, WorldCom purchases MFS Communications and UUNet, the major Internet carrier, in a $12 billion stock swap. The merger creates the first fully integrated local and long-distance phone company since the old Bell system. Grubman helps to arrange the deal, which brings Salomon $7.5 million in fees.
How much was WorldCom worth in 1989?
The article states: "A $100 investment in WorldCom in 1989, for instance, would be worth $1,580 by January; that, according to the company, is about 10 times the best return generated by WorldCom's primary competitors, the Big Three of long distance: AT&T Corp., MCI Communications Corp. and Sprint Corp.".
What did Weill ask for in 1999?
Spitzer's team unearths a November 1999 memo that Grubman had written to Weill in which he asks for Weill's assistance in gaining admission for his children into the 92nd Street Y's exclusive preschool. After the AT&T upgrade and after Grubman's children are admitted to the school, Weill arranges for Citigroup to provide a $1 million donation to the 92nd Street Y.
How much does Salomon make for WorldCom?
According to The Wall Street Journal, Salomon earns $32.5 million for advising WorldCom on the MCI deal. In a brazen deal, Sanford I. Weill, chairman of the Travelers Group and John S. Reed, chairman of Citicorp, announce a merger of their giant financial empires in a $70 billion stock swap that dwarfs the WorldCom-MCI merger.
Is MCI bigger than WorldCom?
At the time, MCI -- which had been close to merging with British Telecom -- is more than three times the size of WorldCom. The takeover is the largest in history -- WorldCom pays $37 billion in stock for the deal in which MCI's long-distance assets are joined with WorldCom's local phone and Internet businesses.
When did the FCC issue the interconnection order?
On Aug. 8, 1996 the FCC releases a 682-page "interconnection order" which sets the rules for opening local markets. Initially, the rules are tilted against the Baby Bells' in favor of their competitors.
Is WorldCom linked to Wall Street?
ISIS' growing foothold in Afghanistan is captured on film. The meteoric rise and fall of WorldCom has been intimately linked to Wall Street investment firms -- in particular Salomon Smith Barney and its parent company Citigroup.