Local WorldCom investors take ‘wait and see’ attitude
Published 5:00 am Thursday, June 27, 2002
WorldCom’s announcement Wednesday that it had disguised $3.8billion in expenses, further rocking the already battered company,has local investors concerned with its future and anxiously waitingto see what develops next.
“We’ll just have to wait and see,” said Tom Moak.
Chandler Russ, executive vice-president of theBrookhaven-Lincoln County Chamber of Commerce and a WorldComstockholder, said he had mixed feelings about the announcement.
“I was obviously saddened by the news and disappointed in howthings were going. This company did not need any more negativenews, but I was also pleased that the leadership was forthcomingwith some hard information knowing that the market would reactnegatively,” he said.
Local residents are dismayed by the implications of fraudulentaccounting practices, but are confident that WorldCom will do theright thing.
“Whatever legal avenues need to be taken, I’m sure they will,”Moak said.
George Hennington, another stockholder, agreed, but also voicedhis concern about both WorldCom’s and accounting firm ArthurAnderson LLP’s cross accusations.
“Things happen sometimes,” he said, “but someone’s not tellingthe truth.”
Anderson’s denials are shadowed by a recent obstruction ofjustice conviction for their involvement in the shredding ofdocuments important to the Enron investigation. Anderson was theaccounting firm used by both Enron and WorldCom.
Brookhaven residents remember with pride that Mississippi’s onlyFortune 500 company began on Highway 84 West as LDDS Communicationsin 1983. It grew fast. WorldCom’s stock was one of the betterperformers of the 1990s and the company made more than 60acquisitions in the past 15 years, including a merger with MCI.
“Brookhaven, through investment and personnel, helped build LDDSinto the second largest telecom in the world. That is an enormousaccomplishment, and one that as Brookhavenites we should continueto be proud of,” Russ said.
Moak is one of the lucky investors. He bought into the companyin the early 1980s and rode along as the stock climbed, eventuallytopping out at more than $60 a share. Moak said he sold nearly allof his stock “some time ago,” but did not specify when.
“It was a wonderful opportunity,” he said. “I kept a couple ofhundred shares or so. I’m not sure why. I guess just to say I stillhad some.”
Russ is also taking his losses in stride.
“I had a little WorldCom stock in my portfolio. I made aninvestment and it did not pan out,” he said. “That is the nature ofour free markets. I know people who have sizable shares of WorldComcurrently. I know people who have made sizable profits fromWorldCom, and I know people that have lost money in WorldCom. Iwish we all could have won, but I assure you that those employeesat WorldCom wanted us to win as well.”
Moak and Russ exemplify the way many locals feel about thecompany. Despite its spiral towards bankruptcy, an ongoing SecurityExchange Commission investigation into accounting practices and apossible criminal investigation by the Justice Department forfraud, local investors still hold out hope that the company can notonly survive, but eventually regain its power in the worldmarket.
The company’s seeming collapse does not mean local residentsshould forget or regret their involvement in WorldCom and shouldcontinue to look upon it with pride, he said.
“Brookhaven cannot control world markets, investor confidence orpoor accounting practices, so does it change the accomplishmentbecause WorldCom is in a very tough spot. No. The accomplishmentsare worthy of recognition and praise,” Russ said. “It does noteffect Brookhaven’s reputation one bit. Brookhaven is still thebest location to start or locate your business in southwestMississippi and, in my opinion, the South in general. A bad coupleof years on Wall Street cannot erase that.”
Russ said Brookhaven’s economy will be dealt a blow if WorldComdeclares bankruptcy, but not one that it can’t recover from.
“Even though that wealth is on paper, any time you have a largemass exodus of wealth leave your economy it will have a negativeimpact. But, Brookhaven has a resilient local economy that serves aregional market,” he said. “Regardless of WorldCom, people stillneed products and services. It is simple supply and demand.Brookhaven, through its business community, will provide thoseproducts and services to the marketplace.”