WorldCom Inc. President and CEO John Sidgmore today attempted to assure customers, investors, partners and the government that his company will emerge from its current financial and legal debacle as a viable business.
In a press conference at the National Press Club in Washington, D.C., Sidgmore acknowledged the widespread outrage ensuing from WorldComs disclosure last week of more than $3.8 billion in improper accounting. Last week, the U.S. Securities and Exchange Commission charged WorldCom with defrauding investors, and other federal agencies have also opened investigations.
Asserting that WorldCom differs from the many telecommunications ventures that have shut down in the past two years, Sidgmore said the company has more than $2 billion in the bank and does not face a potentially problematic payment until January. He said he is optimistic that he will receive two proposals from lenders this week, and he expects to continue serving customers as usual.
“The chances of us having a blip in our service level are low,” Sidgmore said. “I dont see any significant chance of UUNet going dark under any circumstances.”
One of the worst things that could happen to the Clinton, Miss., carrier would be a sudden exodus of customers and a consequent sudden decrease in revenue. Sidgmore said that no “significant customer” has cancelled service since the accounting impropriety disclosure last week, and that he is personally making calls to ease customers fears.
“There are people who are nervous – theres no question about that,” he said. “Our most important effort right now is working with our customers and with our employees to restore their confidence.”
The company may eventually have to file for bankruptcy protection, but that is not the preferred course, Sidgmore said. Instead, he is trying to sell non-core assets, including operations in South America and Japan as well as fixed wireless business and real estate. The company announced several weeks ago that it was trying to sell its mobile wireless resale business.
One immediate impact from last weeks disclosure is pressure from vendors seeking improved payment terms, including payment in advance of service delivery, Sidgmore said, adding that it could be “sticky” if vendors try to “squeeze” WorldCom for payment up front. Additionally, the company is concerned about service arrangements with local exchange carriers, primarily the Regional Bell Operating Companies, which Sidgmore said he spoke with Federal Communication Commission Michael Powell about today.
Sidgmore tried to distance himself and his management team from the alleged book-cooking. “I want to remind everyone it was this company that audited the auditors,” he said. “It was this management team that took matters to the SEC.”
It remains unclear whether former CEO and company founder Bernard Ebbers was aware of the accounting irregularities. “We dont know anything about Bernie – whether he was involved or whether he wasnt involved, and thats the truth,” Sidgmore said.
Sidgmore also emphasized that WorldCom provides critical services to numerous federal agencies, including homeland security operations. “America itself has a major stake in our survival,” he said. “We serve some of the largest agencies of the federal government, including the Defense Department, the State Department and the General Services Administration.”
The SEC is requiring WorldCom to “clarify” the filing it submitted, but Sidgmore said it is very unlikely that there will be any major revelations in the clarification.
WorldComs internal investigation is likely to continue for at least a few months, Sidgmore said.
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- Inside WorldComs Billing Blunders (Baseline)
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- WorldCom CEO Ebbers: Requiem for a Heavyweight (The Net Economy)