Ebbers Out At WorldCom: Investors here blame industry-wide troubles
In the city where WorldCom got its start as LDDS almost 20 yearsago, long-time investors today pointed to telecommunicationsindustry-wide problems as reasons behind company President andChief Executive Officer Bernie Ebbers’ resignation.
Max Thornhill, a member of the LDDS board of directors untilSeptember 1993, praised Ebbers for his role in developing thecompany into WorldCom and for his decision to step down.
“Bernie has done an unbelievable job in building WorldCom intoone of the world’s largest telecom companies,” Thornhill said
However, Thornhill, who remains a shareholder, said difficultieswith the 1996 Telecommunications Act regarding “last mile”solutions, the economic slowdown, network grooming by companies,continued pricing pressure, alternate services such as e-mail,wireless and text messages, all have negatively impacted the entiretechnology and telecommunications sector.
“It is a statesmanlike action for Bernie to step down if hefeels his continued role as CEO is a distraction to the viabilityand capability of the company,” Thornhill said.
James D. Keene, an early investor in LDDS after its stock wasoffered publicly, said the telecommunications industry in generalis “in the tank.” He described the situation as a “war going on tosee who’s left” and did not cite Ebbers as the reason forWorldCom’s downfall.
“I don’t think anyone could keep what’s happening now fromhappening,” Keene said.
As long as it’s afloat, Keene said he is keeping his WorldComstock.
“When it disappears off the board, mine will go with it,” Keenesaid.
Some other local investors contacted this morning were eitherunaware of Ebbers’ decision or had no comment.
WordCom’s beginnings are deeply rooted here in Brookhavenalthough the company’s original beginnings were in Dyersburg, Tenn.However, the company was a failing venture when Brookhaven residentDavid Singleton, Ebbers, Bill Fields of Tupelo and Murray Waldronof Hattiesburg gathered together in 1983 in a coffee shop inHattiesburg to discuss an investment opportunity.
From that meeting — with the name LDDS sprawled on a napkinhanded to them by a waitress and a handwritten financial proforma– began the company now known as WorldCom.
The Brookhaven connection started with that meeting and thecommitment of several Brookhaven residents — Thornhill, CarlAycock and Danny Dunnaway — to put up the original seed money of$100,000 each. Numerous local individuals joined the investors witha $25,000 loan that included stock.
The company went public in 1989. Along with the publicofferings, local investors jumped on to the bandwagon for atremendous financial ride. With the exception of a downturn in theearly 1990s that saw the stock drop to the mid-teens, the stock didnothing but climb, making many in the Brookhaven areamulti-millionaires.
Ebbers became a icon in the industry with his ability to build acompany from scratch to one of the largest telecommunicationcompanies in the world.
The downturn of the stock began in June of 2000 from its high of$64.50 per share in June 1999 with the failed bid to purchaseSprint. WorldCom stock closed Monday at $2.35.
Ebbers offered his resignation to the board on Friday with thepublic announcement coming early Tuesday morning.