If there is a symbol of all things wrong in the increasingly toxic meltdown of the telecommunications industry, it is Bernard Ebbers' WorldCom Inc. -- once the symbol of all things right.
On Tuesday, the company announced that Ebbers, 60, resigned as chief executive and president of the company that became his life's work.
Starting with a cut-rate long-distance service nearly two decades ago, Ebbers built WorldCom into the nation's second-largest long-distance carrier, making its stock as much a must-have investment as steel, autos and utilities were to past generations. He did it with an aggressive strategy that was all teeth -- acquire, acquire, acquire. But that game plan finally caught up with him.
Ebbers' departure, which has come amid growing pressure from company board members, makes him the highest-profile casualty thus far in a telecommunications bust so relentless that it has vaporized $2 trillion in shareholders' money over the last two years.
And WorldCom has become the poster child of high-tech disaster, neatly encapsulating all the woes of the industry: overwhelming debt, declining revenue and questionable accounting practices.
"The big mistake was to have only one growth strategy, and that was to (buy up) other companies," said Scott Cleland of Precursor Group, a Washington-based research firm. "When that was over, there was no growth strategy to replace it."
The company said it is healthy enough to survive the downturn. It has more than $2.5 billion in cash, steady income from its long-distance business and a worldwide fiber-optic network that carries more data traffic than any of its rivals.
Brainerd Dispatch ©2013. All Rights Reserved.