Worldcom: Examining a Business Failure
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WorldCom: Examining a Business Failure
The Nation’s second largest long distance telecommunications company, WorldCom announced on June 25, 2002 that it had overstated earnings in 2001 and the first quarter of 2002 by more than $3.8 billion. This shocked financial analysts and had a noticeable effect on the financial market. Prior to that announcement, WorldCom stock fallen from a high of $64.50 a share to less than $2 a share. After the announcement, WorldCom stock fell below $1 a share after hearing news there might be more irregularities with the accounting.
On July 21, 2002, WorldCom filed Chapter 11 bankruptcy with a $41 billion debt and $103.8 billion in assets, the largest bankruptcy in United States (U.S.) history. In 1999 businesses reduced budgets on equipment and telecom services, and profits decreased at WorldCom. WorldCom’s Chief Execute Officer (CEO) Bernard Ebbers, resigned when he was questioned about $366 million in personal loans from WorldCom. In 1983, Bernard Ebbers started a company providing long distance services in Jackson, Mississippi called Long Distance Discount Services (LDDS). In 1995 after Bernard Ebbers had acquired other business, he changed the company’s name form LDDS to WorldCom. Bernard Ebbers purchased Microwave Communications, Inc. (MCI), Telecommunications Company for $37 billion in 1995. At this time, MCI was the second long distance provider to American Telephone and Telegraph (AT & T).
With fraudulently and major accounting misrepresentations from 1999 until 2002 WorldCom covered up the organizations financial condition. This was one of the largest public company accounting frauds in history (www.fl1findlaw.com). On March 31, 2003, according the document entitled “Report of Investigation” reported as follows: “As enormous as the fraud was, it was accomplished in a relatively mundane way. More than $9 billion in false or unsupported accounting entries were made in WorldCom’s financial systems in order to achieve...
The Nation’s second largest long distance telecommunications company, WorldCom announced on June 25, 2002 that it had overstated earnings in 2001 and the first quarter of 2002 by more than $3.8 billion. This shocked financial analysts and had a noticeable effect on the financial market. Prior to that announcement, WorldCom stock fallen from a high of $64.50 a share to less than $2 a share. After the announcement, WorldCom stock fell below $1 a share after hearing news there might be more irregularities with the accounting.
On July 21, 2002, WorldCom filed Chapter 11 bankruptcy with a $41 billion debt and $103.8 billion in assets, the largest bankruptcy in United States (U.S.) history. In 1999 businesses reduced budgets on equipment and telecom services, and profits decreased at WorldCom. WorldCom’s Chief Execute Officer (CEO) Bernard Ebbers, resigned when he was questioned about $366 million in personal loans from WorldCom. In 1983, Bernard Ebbers started a company providing long distance services in Jackson, Mississippi called Long Distance Discount Services (LDDS). In 1995 after Bernard Ebbers had acquired other business, he changed the company’s name form LDDS to WorldCom. Bernard Ebbers purchased Microwave Communications, Inc. (MCI), Telecommunications Company for $37 billion in 1995. At this time, MCI was the second long distance provider to American Telephone and Telegraph (AT & T).
With fraudulently and major accounting misrepresentations from 1999 until 2002 WorldCom covered up the organizations financial condition. This was one of the largest public company accounting frauds in history (www.fl1findlaw.com). On March 31, 2003, according the document entitled “Report of Investigation” reported as follows: “As enormous as the fraud was, it was accomplished in a relatively mundane way. More than $9 billion in false or unsupported accounting entries were made in WorldCom’s financial systems in order to achieve...