Does anyone know if there was a correlation between the shareholders' meeting and the stock's big drop at 12:30 PM EDT?
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At WorldCom, Bernie's Gone but Not Forgotten
By Scott Moritz
Senior Writer
06/14/2002 02:47 PM EDT
While it was the new CEO's show, the WorldCom annual meeting was more about Bernie Ebbers than current chief John Sidgmore.
WorldCom shareholders, having seen a 90% drop in their investment over the last year, aren't the happiest group of folks you could call together in one big room. When the meeting was opened up for questions from the floor, Ebbers became the main topic.
Sidgmore outlined his efforts to return WorldCom to former glory and said the company was bringing costs down and selling assets for cash. Many of Sidgmore's stated goals consisted of correcting the damage of the past management headed by Ebbers, who he replaced six weeks ago.
Among the needed repairs is restoring employee morale, a popular task before many top managers these days. Sidgmore also acknowledged that WorldCom's six-year, 78-company acquisition spree didn't always add winners. Though he gave no specifics, he said the company would be culling some of the losers from the bunch.
Sidgmore didn't offer any new details about the restructuring effort, but he said the company was in the process of completing a pending $1 billion spending cut and a 20% reduction in staff. The cuts, along with the elimination of the MCI (MCIT:Nasdaq - news - commentary - research - analysis) tracking stock and the termination or sale of its resale wireless business, will save an additional $1 billion in cash, he said. The company said these moves will produce $1 billion in positive cash flow by the end of the year.
Also, the company said it expects to close its new $5 billion credit facility in the next few weeks.
WorldCom said it hasn't lost any of its top 100 corporate customers. In fact, said COO Ron Beaumont, they won a few new customers, hinting that Allstate and Wells Fargo were among the recent wins.
"We are surprised that customers have been this loyal," Sidgmore said.
But still, the questions kept coming back to Ebbers. One shareholder asked why the board saw fit to give Ebbers a lifetime annual pension of $1.5 million. The answer: Pretty standard for a guy who built a substantial company.
"It isn't atypical in today's environment," Sidgmore said.
Another shareholder asked why WorldCom would agree to loan money to Ebbers, who by all appearances has negative net worth. A WorldCom auditing and compensation committee director disputed the shareholder's assertion. Saying he was familiar with Ebbers' financial information, the director said the $408 million loan is more than fully collateralized.
After a couple more questions, the executives brought the meeting to an end. A mercifully quick end if you are Bernie Ebbers.
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