Correction, he didn't lie. He created a carefully constructed speech that didn't guarantee anything. Just as he said "listen carefully."
Ebbers addressed the doom and gloom rumors head on by talking about bankruptcy possibilities, his personal finances and the company's future.
"I want to hit these concerns head on, so listen carefully," Ebbers said.
WorldCom is cash-flow positive, meaning it is bringing in more money from its operations than it is spending to expand its network, Ebbers said. The company had intended to reach that benchmark during the year and was able to do so earlier than expected, he said.
WorldCom has not been using "off balance-sheet accounting," Ebbers said. Bankrupt Enron Corp. allegedly used the tactic to hide losses.
JP Morgan analyst Marc Crossman said WorldCom released more information in its earnings announcement than it traditionally has to prove to investors that its finances are clean.
Ebbers added, "Now, on to the other nonsense in the rumor mill."
Bond agencies have said they have no plans to downgrade WorldCom's $28.7 billion in debt. Several ratings agencies have stated that WorldCom's debt is stable, meaning the chances of a bankruptcy filing are very slim.
"Our debt load is very manageable. Our (ratings) are appropriate and acceptable... Bankruptcy or a credit default is not a concern," Ebbers said.
Ebbers also discussed the money he owes WorldCom. In 2000, the company loaned him money and guaranteed further loans so the CEO would not have to sell shares to pay off investment debts, easing fears that he would dump a portion of his 27 million shares on the market.
Ebbers said Thursday he has enough in assets outside of his WorldCom stock to handle the $340 million he owes the company.
Crossman said despite these assurances, he does not expect to see WorldCom climb back to the $12 per share price range very quickly. |
