Sec Investigation of Worldcom Essay

2853 Words Sep 2nd, 2013 12 Pages
Imagine working for a company that provides everything you need financially from an employer, good benefits, decent salary and stock options that make other companies within the industry jealous. How many other middle managers in the industry can claim a net worth of over one million dollars? During WorldCom’s highest point, some of the middle managers could honestly make such a claim because they had so much stock and the price seemed to just keep going up and up. The stock splits, and because of the stock option, instead of a dividend the employees get more stock. Then all of a sudden one March morning all these millionaire managers wake up to discover they are not only now worth just a few hundred bucks, but that their jobs were …show more content…
In 1998, WorldCom formed its first international partnership, teaming with MCI and Spain’s Telefonica to expand the company’s reach in Europe and Latin America (Internet Services, 2011).

WorldCom became a telecommunications giant following its 1998 acquisition of MCI Communications Corp. which provided local and international telecommunications services, such as voice, data, paging services, and Internet access (Internet Services, 2011). WorldCom was now able to provide services over its own network of fiberoptic cables located in major cities, as well as some between the United States and the United Kingdom. In 2000, WorldCom organized into two divisions: MCI Group, which concentrated on the consumer market including dial-up Internet services, and WorldCom Group, which managed networking, data, and Internet operations (Internet Services, 2011).

WorldCom’s success acquiring other companies and creating some of the largest telecommunications mergers in history had investors taking notice and purchasing stock in the company. Rising stock prices gave the company financial leverage and allowed it to purchase more companies. The stocks highest trade was near $65 in 1999. The pressure on WorldCom to keep the stock high and maintain its success was the beginning of its fraudulent accounting practices. The company had over 20 million consumer customers, thousands of

Related Documents