WorldCom files for bankruptcy - largest declaration ever; corporate assets at $107 BILLION

The Dallas Morning News ^ | July 22, 2002 | By VIKAS BAJAJ / The Dallas Morning News

[MeekOneGOP]

WorldCom: The World's largest CON. WorldCon.......

WorldCom's collapse began in late June, when it revealed that it had inflated earnings by improperly accounting for $3.8 billion in expenses for 15 months beginning in January 2001. The Securities and Exchange Commission has charged the company with civil fraud, and the U.S. House Energy and Commerce Committee is investigating the company's books dating to 1999.

[Oldeconomybuyer]

Recent Events
	July  2	Price hit new 52-week low ($0.05)
Location
	500 Clinton Center Drive Clinton, MS 39056
	Phone: (601) 460-5600 Fax: (601) 974-8350
	Employees (last reported count): 61,800

[kitkat]

BUMP for further discussion.

[palmer]

100B in assets, 40B in debt. Employees get cut, shareholders get nothing, big brokerages get ownership. Sounds like a scam.

[TigersEye]

BTTT

[Centurion2000]

bump

[lds23]

Is it my imagination, or did the government's attempt to save consumers money by fostering competition by breaking up the old phone monopoly just cost consumers billions?

[Registered]

Another BubbaBubble bursts all over the face of Bush. Another tool for the Demoncrats to use against the GOP in November.

[Vets_Husband_and_Wife]

Is it my imagination, or did the government's attempt to save consumers money by fostering competition by breaking up the old phone monopoly just cost consumers billions?

Yeah.. how dare the Government try to act responsibly.. how dare them insist on honestly, truthfullness, and integrity!!!

How dare them not put the greedy people first, who created this mess. How dare them!!!!

Sheesh!!

[Vets_Husband_and_Wife]

Another tool for the Demoncrats to use against the GOP in November.

Against the GOP? Anyone with a brain the size of a mouse, would know this started under the Clintoon admins watch. Even candidate Bush warned of this. I HOPE Americans are more savvy than this.. but we'll see.

[lds23]

Actually, I was referring to the 1984 divestiture of Ma Bell, and the subsequent Telecom act of 1996, which had all kinds of unintended consequences. Of course, we'll never know if the price of a phone call would have declined anyway, or whether wireless use would have grown anyway. But given the fact that the Baby Bells may soon regain their monopoly holds anyway, it seems like people lost a lot more in the market than they ever saved.

I agree that the fraudulent practices are at fault, too, but there are a lot of structural problems as well.

Courtesy of this week's Economist:

The great telecoms crash

Too many debts, too few calls

Exaggerated figures for Internet traffic inflated the telecoms bubble

[Vets_Husband_and_Wife]

EXCELLENT articles. Thanks!!

[aShepard]

100B in assets, 40B in debt

Well, the $100B in assets is very misleading.

World Com lists current assets at $9B, and Plant and equipment at $39B, including the bogus $4B in capital expenditures. The rest of the "assets" are intangible and goodwill, which, with all the "good publicity" of how well the brands are doing, became worth next to zero once they took the tube.

So, after writing down the receivable from Ebbers of about $400 million, secured by stock worth $0.16 cents, and extracting the bogus capital expenditures, hard assets of $43B, compared to hard debt of about $40B, leaves slim pickings for the shareholders.

[NeoCaveman]

100B in assets, 40B in debt. Employees get cut, shareholders get nothing, big brokerages get ownership. Sounds like a scam.

50 B of those assets are goodwill which is inherently worthless, now back out the 4 B that was called capitalized assets that are really expenses. This brings it to 46 B in assets and 40 B in Debt. If the 46 B of assets on the books can be sold at say 90% their book value. The firm is worth nothing.

[razorback-bert]

If Worldcom has corporate assets of $107 billion, it's only because of AA accounting.

[Silly]

"These many." -- John Sidgmore, the chief executive of WorldCom, in response to the question, "How many millions did you personally pocket before announcing the bankrupty of your company?"

[MeekOneGOP]

Sigh.............

[FLCowboy,]

Is it my imagination, or did the government's attempt to save consumers money by fostering competition by breaking up the old phone monopoly just cost consumers billions?

It sure did. The only way MCI (and Worldcom) could "build" their networks after given the green light from the government to compete in the regulated long distance market was to borrow billions of dollars to buy right-of-way, switches, outside plant in the form of microwave towers (Microwave Communications Incorporated = MCI).

The phone companies and AT&T were saddled with 30 year amortization schedules. Not a good plan when you have to borrow billions to build the network.

Yes, you can blame the government for screwing up a good thing. It took longer than I expected, but it finally happened. The best solution left now is to divide the Worldcom/MCI spoils among IDT, Sprint, AT&T, and the Baby Bells. Name one industry saddled with government oversight that has ever succeeded.

[gaffin]

I would question if worldcom really does have 107 in assets. They are not honest about the numbers.

[historian1944]

From what I've read, the government screwed it up in the first place by allowing AT&T to become a monopoly. Sometime around 1928 (or thereabouts, I'm not sure), there were dozens of phone companies, and none of them were wired together. So, you and your neighbor couldn't talk to each other on that new fangled contraption unless you bought service from the same company.

Seems to me that had they allowed another year or two to pass, that all those companies would have figured out a way to connect each other. Instead, FedGov stepped in, and chose AT&T to connect everyone.

So, later they try to undo what they had done, and we have today.