WorldCom
About the Lecture
The lecture WorldCom by Edu Pristine is from the course ARCHIV Case Study: PRM. It contains the following chapters:
- WorldCom
- Business strategy
- Accounting irregularities
- Role of Stock analysts
- Loans to executives
- Lessons learned
Author of lecture WorldCom
Edu Pristine
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Excerpts from the accompanying material
... strategy: Worldcom grew in size through 65 acquisitions, including a few big ones like MCI communications for USD 30 billion that were mainly debt-financed. Through these acquisitions, the company was able to sell its future growth story to the Wall Street (largely with help of a single Analyst at Saloman Smith Barney: Mr. Jack Grubman) ...
... dilemma that her disclosures might close the company, leading to huge scale job losses. Role of Stock analysts Jack Grubman (Telecom sector analyst at Smith Barney) and Smith Barney, Citibank's investment banking arm were involved in mutually beneficial deals. Since CEO had taken loan against collateral of Worldcom's shares, it was in everyone's benefit that share prices go up. Grubman ensured this by giving ...
... leading to margin calls from the lenders. This created a dilemma for the CEO and Board: selling his own company shares for his personal finances, which would have sent a negative signal to the market. The Board disallowed the CEO from selling shares to meet margin calls. Ebbers was also not guilty of making money ...
