Rise and fall of worldcom case study

Unfortunately it looks as though the people who invested their money in his creation will soon be left high and dry. But Mr Ebbers would not be satisfied with serving only local customers.

Usually sober bankers and investment analysts were entranced by his plain-speaking manner and as the company grew its share price defied gravity. This scandal could not have come at a worse time. Only at that point did Mr Grubman take the stock off his top tips list, although he still reckoned it had a big future.

Mr Ebbers had no trouble finding people willing to give him a hand. A basketball scholarship took him to Mississippi College and after graduating in the late s he coached high school teams.

Suddenly investors were interested in the ability of new telecoms companies to outpace the traditional old operators. Analysts started to think the company might run out of money next year unless it could convince its banks or the bond markets to stump up more cash.

In the end Mr Ebbers decided to back down and allowed the UK-based mobile phone network Vodafone to buy the business. It bought a ritzy new office just outside Reading city centre and prepared to do battle with the likes of BT, France Telecom and Colt.

How Cooking the Books Works

As the shares plunged, his lenders threatened to call in the loans. Quite simply, Mr Ebbers reckoned he was right and the rest of the financial world was making a big mistake. Mr Sullivan was the money man on whom Mr Ebbers relied to realise his vision and turn the telecoms minnow based in the backwaters of Mississippi into the global telecoms powerhouse it became.

Like many analysts of the time, Mr Grubman believed that to succeed in the new era of the internet and the world wide web companies needed to create telecoms networks that spanned the globe - a goal that could only be achieved with serious financial backing.

The rise and fall of WorldCom is a racy tale, even by the standards of the dotcom boom and bust. Showman Mr Ebbers was a one-off - an inveterate dealmaker, Baptist do-gooder and showman. He began his working life delivering milk in Edmonton, Canada.

That meeting at the Days Inn in Hattiesburg has entered financial folklore and been given a romantic tinge - the name chosen for the new company, then Long Distance Discount Services, was suggested by the waitress.

His fall from grace came two months ago, when he was dumped by the company he had built as investors started to doubt his story. Chapter 11 protection from creditors looms - one step away from bankruptcy. In the late s the name Ebbers became synonymous with the new style of US management ushered in by the dotcom boom.

As late as October last year, an analyst at the highly respected Lehman Bros bank recommended that investors carry on buying WorldCom shares. The growth of the internet led to a boom in demand for communications services and Mr Ebbers and his team took full advantage of the easy money which flooded the industry.

Most of his time was taken up by the main love of his youth, basketball. Along the way the company picked up numerous fans on Wall Street, perhaps most notably Jack Grubman, a telecoms analyst at the prestigious investment bank Salomon Smith Barney.

Now he has been joined by his long-time deputy, friend and the man in charge of the finances, Scott Sullivan, accused of cooking the books. Throughout the acquisition spree, WorldCom operated a financial accounting regime that with hindsight masked the true performance of the business as it grew.

After four years of planning and investment, his company opened for business in Europe, threatening to change the competitive landscape for ever. Yesterday, as the full gruesome story of massive fraud became public, the company was worth little more than that napkin.

He insisted there was an unwarranted campaign of slurs and rumours about WorldCom. He met up with three friends at a diner outside Clinton and over countless cups of coffee sketched on the famous napkin the business that would eventually become WorldCom. The story of WorldCom is the story of Bernie Ebbers, a folksy Canadian Sunday schoolteacher with a taste for the high life.

In what might seem like the ultimate irony, Sprint is now being touted as a potential saviour for the very company which once threatened its existence. Mr Ebbers was a regular sort of guy, not your normal buttoned-down businessman.This case describes three major issues in the fall of WorldCom: the corporate strategy of growth through acquisition, the use of loans to senior executives, and threats to corporate governance created by chumminess and lack of arm's-length dealing.

Worldcom case 1. How Unethical Practices Almost Destroyed WorldCom 2. WORLDCOM LEADERSHIP CEO Bernard Ebbers CFO Scott Sullivan.

Case Study The Rise and Fall of WorldcomThis case study is about Bernard Ebbers CEO of Worldcom, Inc. and Scott Sullivan CFO of WorldcomRise and Fall of WorldcomThis case study is about Bernard Ebbers CEO of Worldcom, Inc.

The Case Analysis of the Scandal of Enron Yuhao Li Huntsman School of Business, Utah State University, Logan city, U.S.A Review of Enron’s Rise and Fall Throughout the late s, Enron was almost universally considered one of the country's most innovative In this study, we report new findings that shed light on whether this event.

Aug 08,  · A version of this article appears in print on August 8,on Page A of the National edition with the headline: For WorldCom, Acquisitions Were Behind Its Rise and Fall. Order Reprints. Case Study The Rise and Fall of WorldCom Chapter 10 Prepared For: Prof.

Aahad Osman Gani Group Members Abdulalim Tahir G Assem Riezqa Bernie Ebbers (CEO) and Scott Sullivan (CFO) have become better known for creating a massive corporate accounting fraud that led to the largest bankruptcy in U.S.

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Rise and fall of worldcom case study
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