MCI, Inc. (d/b/a Verizon Business ) is an American telecommunications company, currently a subsidiary of Verizon Communications, with its main office in Ashburn, Virginia. The corporation was originally formed as a result of the merger of WorldCom and the MCI Communications corporation, and uses the name MCI WorldCom , replaced by WorldCom , before changing its name to version now on April 12, 2003, as part of the termination of the bankruptcy status of the company. Companies traded on NASDAQ as WCOM (pre-bankruptcy) and MCIP (post-bankruptcy). The Corporation was purchased by Verizon Communications with a final agreement on January 6, 2006, and is now identified as a division of Verizon Enterprise Solutions company with a local housing division that is integrated into the local Verizon subsidiary.
In the meantime, WorldCom is the second largest telephony company in the United States (after AT & T). WorldCom grew up with the acquisition of other telecommunications companies, especially MCI Communications. It also has Tier 1 ISP UUNET, the main part of the Internet backbone. It was headquartered in Clinton, Mississippi, before being transferred to Virginia.
Video MCI Inc.
History
Company establishment
The company started out as a Long Distance Service , Inc. (LDDS) during 1983, based in Jackson, Mississippi. In 1985, LDDS chose Bernard Ebbers as its CEO. The Company became publicly traded as a company in 1989 as a result of a merger with Advantage Companies Inc. The company name was changed to LDDS WorldCom in 1995, and moved to Clinton, Mississippi.
The company grew rapidly in the 1990s. Among companies purchased or joined by WorldCom are Advanced Communications Corp. (1992), Metromedia Communication Corp. (1993), Resurgens Communications Group (1993), IDB Communications Group, Inc. (1994), Williams Technology Group, Inc. (1995) and MFS Communications Company (1996) and MCI in 1998. The acquisition of MFS includes UUNET Technologies, Inc., which was acquired by MFS shortly before the merger with WorldCom. In February 1998, WorldCom bought - with complicated transactions - online pioneering company CompuServe from its parent company, H & amp; R Block. WorldCom then retained the CompuServe Network Services Division, sold its online services to America Online, and received AOL, ANS network division. The acquisition of Digex (DIGX) during June 2001 was also complex; WorldCom acquired Digex's parent company, Intermedia Communications, and then sold all non-Digex Intermedia assets to Allegiance Telecom.
MCI acquisition
On November 4, 1997, WorldCom and MCI Communications announced a $ 37 billion merger to form MCI WorldCom, making it the largest corporate merger in US history. On September 15, 1998, the new company, MCI WorldCom , opened for business, after MCI broke free of the successful "internetMCI" business for approval from the US Department of Justice.
Proposed Sprint Merge
On October 5, 1999, Sprint Corporation and MCI WorldCom announced a $ 129 billion merger agreement between the two companies. Had the deal been completed, it would be the largest corporate merger in history. The joining company will surpass AT & T as the largest communications company in the United States. However, the deal failed because it was opposed by the US Department of Justice and the European Union for fear of creating a monopoly. On July 13, 2000, the board of directors of both companies terminated the merger. Later that year, MCI WorldCom changed its name to "WorldCom".
Accounting scandal
CEO Bernard Ebbers became very wealthy from rising stock prices in WorldCom common shares. However, in 2000 the telecommunication industry declined. WorldCom's aggressive growth strategy suffered a serious setback when, in July 2000, it was forced by the US Department of Justice to overturn the proposed merger with Sprint. At that time, WorldCom's share price had declined, and banks placed increasing demand on Ebbers to cover margin calls on WorldCom shares used to finance other businesses (timber and yachting, among others). In 2001, Ebbers persuaded the WorldCom board of directors to grant him loans and corporate guarantees of more than $ 400 million to cover his margin calls. The board hopes that the loan will prevent Ebbers' need to sell large amounts of his WorldCom shares, as his actions will result in a further decline in stock prices. However, this strategy fails. In April 2002, Ebbers resigned as CEO and was replaced by John Sidgmore, former CEO of UUNET Technologies Inc.
Beginning modestly during mid-1999 and continuing at an accelerated pace until May 2002, the company - directed by Ebbers (as CEO), Scott Sullivan (CFO), David Myers (Controller), and Buford "Buddy" Yates (Director General of Accounting ) - using fraudulent accounting methods to disguise its declining earnings to keep WorldCom's stock price.
Fraud is done mainly in two ways:
- "line line" orders (interconnection charges with other telecommunications companies) as capital expenditures on the balance sheet rather than cost.
- Bloat revenue with fake accounting entries from "unallocated corporate earnings account".
In 2002, a small team of internal auditors at WorldCom worked together, often at night and in secret, to investigate and reveal frauds worth $ 3.8 billion. Soon after, the audit committee and the company's board of directors were informed of the fraud and acted quickly: Sullivan was dismissed, Myers resigned, Arthur Andersen withdrew his audit opinion for 2001, and the US Securities and Exchange Commission (SEC) initiated an investigation of these matters June 26, 2002 (see accounting scandal).
By the end of 2003, it was estimated that the total assets of the company had swelled about $ 11 billion. This made the WorldCom scandal the largest accounting fraud in American history to the exposure of the $ 64 billion Ponzi scheme in 2008.
Bankruptcy
On July 21, 2002, WorldCom filed for Chapter 11 bankruptcy protection in the largest filing in US history at the time (since it was followed by the second bankruptcy of Lehman Brothers and Washington Mutual in the eleven-day span during September 2008). WorldCom's bankruptcy proceedings were held before US Federal Bankruptcy Judge Arthur J. Gonzalez, who simultaneously heard of Enron's bankruptcy process, which is the second largest bankruptcy case resulting from one of the largest corporate fraud scandals. None of the criminal proceedings against WorldCom and its officers and agents are from referrals from Gonzalez or Justice Department attorneys. With the bankruptcy reorganization agreement, the company paid SEC $ 750 million in cash and shares in the new MCI, intended to be paid to the aggrieved investor.
Effective December 16, 2002, Michael Capellas became chairman and chief executive officer. On April 14, 2003, WorldCom changed its name to MCI , and moved its corporate headquarters from Clinton, Mississippi, to Dulles, Virginia.
During May 2003, the company was awarded a non-tender contract by the US Department of Defense to build a mobile phone network in Iraq. The deal has been criticized by competitors and others, citing the company's lack of experience with the technology.
The SEC and WorldCom concluded an agreement in which WorldCom agreed to pay a civil penalty of $ 2.25 billion. The agreement was approved by federal judge Jed Rakoff during July 2003. In a sweeping approval decision, the SEC and Rakoff essentially took over WorldCom. Rakoff appointed former SEC chairman Richard C. Breeden to oversee WorldCom's compliance with the SEC agreement. Breeden actively involved him with company management, and prepared a report for Rakoff, entitled Restoring Trust, in which he proposed broad corporate governance reforms, as part of efforts to "throw new MCI into what he hoped would be a model of how shareholders must be protected and how the company should be run ".
Post-bankruptcy
The company emerged from the bankruptcy of Chapter 11 in 2004 with about $ 5.7 billion in debt and $ 6 billion in cash. About half of the cash is meant to pay for various claims and settlements. The previous bondholders eventually paid 35.7 cents, in bonds and shares in the new MCI company. Shares of previous shareholders were canceled, making it completely worthless.
It has not paid much of its creditors, who have been waiting for two years for some of the money owed. Many small lenders include former employees, especially those who were dismissed during June 2002 and whose severance and benefits were withheld when WorldCom filed for bankruptcy.
On August 7, 2002, the group exWorldCom 5100 was formed. It consists of former WorldCom employees with the common goal of seeking full severance pay and benefits under the WorldCom Severance Scheme. The "5100" stands for the number of WorldCom employees dismissed on June 28, 2002 before WorldCom filed for bankruptcy.
On February 14, 2005, Verizon Communications agreed to acquire MCI for $ 7.6 billion.
On March 15, 2005, Bernard Ebbers was found guilty of all charges and convicted of fraud, conspiracy and filing of fake documents with regulators - all linked to a $ 11 billion accounting scandal. Other former WorldCom officials charged with criminal penalties in relation to financial misstatements include former CFO Scott Sullivan (pleading guilty on March 2, 2004, to one count of each securities fraud, conspiracy to fraud securities, and filing false statements ), former controller David Myers (pleading guilty to securities fraud, conspiracy to fraud securities, and filing false statements on September 27, 2002), former accounting director of Buford Yates (pleading guilty to conspiracy and fraud charges on October 7, 2002), and former accounting managers Betty Vinson and Troy Normand (both pleaded guilty to conspiracy and securities fraud on October 10, 2002).
On July 13, 2005, Bernard Ebbers received a penalty that would keep him in jail for 25 years. At the time of punishment, Ebbers is 63 years old. On September 26, 2006, Ebbers handed himself to the prison of the Federal Bureau of Prisons in Oakdale, Louisiana, the Federal Oakdale Penitentiary, to begin serving his sentence.
In December 2005, Microsoft Corporation announced that MCI will join it by providing Windows Live Messenger's "Voice Over Internet Protocol" (VoIP) service to make phone calls. This is the last new product of MCI --- called "MCI Web Calling". After the merger, the product was renamed "Verizon Web Calling".
In March 2007, 16 of the 17 former WorldCom underwriters reached settlements with investors. Citigroup settled for $ 2.65 billion on May 10, 2004.
Maps MCI Inc.
See also
- 1800collect
- Corporate governance
- Company scandal
- Dot-com bubble
- Vivien v. WorldCom
References
Further reading
Lynn J. W. Jeter (2003). Disconnected: Deceit and Betrayal at WorldCom . Wiley. ISBNÃ, 0-471-42997-X.
External links
- Official MCI website
- WorldCom (Archive)
- the company website of Verizon Enterprise Solutions
- MCI William McGowan: 1968 to 1991
Source of the article : Wikipedia
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