Worldcom Research Paper

Worldcom Research Paper-47
World Com's expenses as a percentage of its total revenue increased because the growth rate of its earnings dropped.This also meant World Com's earnings might not meet Wall Street analysts' expectations.The postscript also will relate subsequent important events in the telecommunications industry, the effect of World Com's problems on its competitors and labor market, and the impact World Com had on the lives of the key players associated with the fraud and its exposure.

Ebbers was found guilty on all counts in March 2005 and sentenced to 25 years in prison, but is free on appeal.

Sullivan pleaded guilty and took the stand against Ebbers in exchange for a more lenient sentence of five years.

The low margins that the industry was accustomed to weren't enough for Bernie Ebbers, CEO of World Com.

From 1995 until 2000, World Com purchased over sixty other telecom firms. World Com moved into Internet and data communications, handling 50 percent of all United States Internet traffic and 50 percent of all e-mails worldwide.

In 2000, World Com began classifying operating expenses as long-term capital investments.

Hiding these expenses in this way gave them another .85 billion.

These changes turned World Com's losses into profits to the tune of

Hiding these expenses in this way gave them another $3.85 billion.

These changes turned World Com's losses into profits to the tune of $1.38 billion in 2001.

It also made World Com's assets appear more valuable.

An internal audit turned up the billions World Com had announced as capital expenditures as well as the $500 million in undocumented computer expenses.

There was also another $2 billion in questionable entries.

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Hiding these expenses in this way gave them another $3.85 billion.These changes turned World Com's losses into profits to the tune of $1.38 billion in 2001.It also made World Com's assets appear more valuable.An internal audit turned up the billions World Com had announced as capital expenditures as well as the $500 million in undocumented computer expenses.There was also another $2 billion in questionable entries.When it emerged from bankruptcy in 2004, World Com was renamed MCI.Former CEO Bernie Ebbers and former CFO Scott Sullivan were charged with fraud and violating securities laws.These newly classified assets were expenses that World Com paid to lease phone network lines from other companies to access their networks.They also added a journal entry for $500 million in computer expenses, but supporting documents for the expenses were never found.was not wholly attributable to World Com's behavior, AT&T Corp.'s decimation certainly was facilitated by the events surrounding World Com, since World Com was the benchmark long distance telephone and Internet communications service provider.Indeed, the ripple effect of World Com's demise goes far beyond one company and several senior managers. This postscript will update the World Com story by focusing on what happened to the company after it declared bankruptcy and before it was acquired by Verizon.

.38 billion in 2001.

It also made World Com's assets appear more valuable.

An internal audit turned up the billions World Com had announced as capital expenditures as well as the 0 million in undocumented computer expenses.

There was also another billion in questionable entries.

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