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WorldCom
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WorldCom
The former name of MCI. Based in Jackson, MS, WorldCom, Inc. was a major, international telecommunications carrier. It was founded in 1983 by Bernard Ebbers as Long Distance Discount Service (LDDS), a reseller of AT&T WATS lines to small businesses. LDDS grew by acquiring more than 70 companies, including IDB WorldCom, a leading international carrier whose name it adopted; WilTel, a major telecom carrier; and MFS Communications, an international phone company and parent of UUNET, a prominent Internet provider.
In 1997, the network operations of America Online and CompuServe became part of WorldCom. It also merged with Brooks Fiber and then acquired MCI, making it the second largest long distance carrier in the U.S. In 2002, WorldCom filed for bankruptcy after disclosing it had inflated profits for the prior two years by $3.8 billion. The amount was later found to be more than $10 billion, making it the largest accounting fraud in U.S. corporate history.
In April 2004, WorldCom emerged from bankruptcy and changed its name to MCI, which it acquired in 1998. MCI was founded in 1968 by William McGowan as Microwave Communications of America. Throughout the 1970s, McGowan led the battle to offer competitive long distance services in the U.S., cracking the monopoly of AT&T.
Ironically, having shed $36 billion in debt, WorldCom emerged from bankruptcy with a better balance sheet than most of its competitors. It also wound up with a corporate name respected for its pioneering efforts in telecom. One year later, MCI was acquired by Verizon. See MCI.
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Investopedia Financial Dictionary:
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WorldCom
Formerly known as WorldCom, now known as MCI, this U.S.-based telecommunications company was at one time the second-largest long distance phone company in the U.S. Today, it is perhaps best known for a massive accounting scandal that led to the company filing for bankruptcy protection in 2002. WorldCom executives effectively fudged the company's accounting numbers, inflating the company's assets by around $12 billion dollars. The swift bankruptcy that followed led to massive losses for investors.
Investopedia Says:
WorldCom's bankruptcy filing in 2002 was the largest such filing in U.S. history. The WorldCom scandal is regarded as one of the worst corporate crimes in history, and several former executives involved in the fraud faced criminal charges for their involvement. Most notably, company founder and former CEO Bernard Ebbers was sentenced to 25 years in prison, and former CFO Scott Sullivan received a five-year jail sentence, which would have been longer had he not pleaded guilty and testified against Ebbers. Under the bankruptcy reorganization agreement, the company paid $750 million to the Securities & Exchange Commission in cash and stock in the new MCI, which was intended to be paid to wronged investors.
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Mentioned in
wireless reseller
(technology)
UUNET
(technology)
MCI Decision
(technology)
WilTel
(technology)
Bernie Ebbers
(business, crime, United States)
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