Examining Business Failure

Essay by artisla11University, Master'sA, March 2010

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Examining Business Failure

Examining Business Failure Paper

University of Phoenix

February 20, 2010

Linda Artis

Success of WorldCom and Ebber

Bernie Ebber, CEO and founder of WorldCom, entered the telecommunications industry in Mississippi in 1983, by founding LDDS. Success would soon pay off for him as he grew the company through acquisitions and in 1995, changed the company's name from LDDS to WorldCom. In 1998, WorldCom purchased MCI for $37 million; this was a huge move for WorldCom, as the telecommunication giant went down in history as being the 2nd largest long distance company. Throughout the 90's WorldCom became highly recognized, as its name was synonymous to success, due to its financial growth and expansion and huge job creations and opportunities. WorldCom's last expansion would be its $129 billion submitted bid to purchase Sprint Corp however, the regulators blocked the deal, because they saw that the telecommunications market was softening, which could potentially weaken the performance of the company.

Failure of Moral of Ethic Values

The financial conditions of World Com were grossly covered up through fraud and false accounting misrepresentation. Over $9 billion of false accounting misstatements were made in order to acquire certain accounting results. The board of directors had failed WorldCom stockholders badly therefore, causing the failure of the telecommunication company and the largest chapter 11 bankruptcy in history. The financial downturn of the company began in the 90's when Bernie Ebber adopted a strategy to acquire substantial growth through the binging acquisitions of businesses and the use of valuable WorldCom stock. In order to continue this shenanigan, World Com stock had to continuously increase. WorldCom went after a series of extremely large business acquisitions.

WorldCom reached its pinnacle of success when it acquired MCI in 1998; a company with over double the...