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Grubman's Last WorldCom Call

This just in: Jack Grubman, the embattled telecom analyst at Salomon Smith Barney, ceased coverage of WorldCom Inc. (OTC: WCOEQ) today, according to Wall Street sources.

Salomon Smith Barney confirmed that Grubman has discontinued his WorldCom coverage today. But a spokesperson declined to send over any particular research, saying, "This is proprietary research that is distributed to clients."

Now that WorldCom is in Chapter 11 bankruptcy proceedings, its shares have been delisted from the major stock exchanges and now trade on the Over the Counter (OTC) exchanges, also known as "pink sheets".

Grubman has been under the government's microscope in recent months because he was particularly bullish on WorldCom through the years, and Salomon has admitted to strong ties to the company. During the time Grubman had a Buy issued on WorldCom, its shares fell more than 90 percent. On April 22, Grubman backed off his bullish stance on the company for the first time, lowering his rating from Buy to Neutral (see WorldCom Finger-Pointing Begins ).

In recent testimony before the Financial Services Committee in the U.S. House of Representatives, Grubman was grilled about his company's investment banking business with WorldCom. In that congressional testimony, Grubman acknowledged that WorldCom generated nearly $80 million in fees to Salomon Smith Barney’s investment banking division from 1998 to 2001 (see WorldCom's Grubby Secrets).

Grubman also admitted that his compensation was indirectly influenced by investment banking deals that his company won. He referred to his "close working relationship" with WorldCom founder and former CEO Bernard J. Ebbers and admitted that he had attended three WorldCom board meetings, in which he served as an advisor for deals between Salomon's investment banking arm and WorldCom. Despite all these connections, Grubman continued to assert his independence and objectivity.

— R. Scott Raynovich, US Editor, Light Reading
http://www.lightreading.com
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lightning 12/4/2012 | 10:00:24 PM
re: Grubman's Last WorldCom Call Scott..too many spelling mistakes here..you are writing an article..you are not posting to a message board..
dodo 12/4/2012 | 10:00:24 PM
re: Grubman's Last WorldCom Call "Despite all these connections, Grubman continued to assert his independence and objectivity."

Just have to read the article on him in last week's Businessweek to realize how greed can make someone be non-objective. He created the whole mess with other new carriers such as McLeod, Global crossing, windstar etc
green 12/4/2012 | 10:00:23 PM
re: Grubman's Last WorldCom Call "no where in the world do so many incompetent people earn so much" Jack Welch, the former CEO of GE - speaking about Wall Street in his book "Straight from the Gut".

Jack Grubman is the worst. He reportedly flunked his written tests, lied that he was from MIT while he actually graduated from Boston University and still made about 20 million/yr last year.
Steve Saunders 12/4/2012 | 10:00:23 PM
re: Grubman's Last WorldCom Call Where are they? I can't find them.
GW Pearson 12/4/2012 | 10:00:22 PM
re: Grubman's Last WorldCom Call Not sure if Grubman was the worst, but certainly he is no better than the rest of them. Most analysts rated the failing telecoms as buys as the stocks went all the way into the dirt. Maybe they were assuming, "At these prices, they're bargains for sure!".

Which turned out to be "almost" true. The almost was that the stocks are now worthless. No dead cat bounce on these puppies.

The amazing thing was that so many analysts were willing to suspend their belief in basic economics. Things like "supply and demand" just never came up in the conversation, or so it would seem.
gea 12/4/2012 | 10:00:21 PM
re: Grubman's Last WorldCom Call Blame it on George Gilder?

I don't know, but there's been this Cornucopia myth floating around the US since the Reagan days, that wealth can be spontaneously created from nothing by some combination of technological bootstrapping and good old fashion faith.

Gilder was one of the main blowers of that crappy horn...insatiable demand creating new technology creating more demand creating lots of $$$ for everyone who gets on board...

Sorry to say it, but had Jack Grubman not existed it would have been necessary to invent him. There's always someone willing to reap the rewards for being the point-man on the latest pyramid scheme. And no matter what happens to Grubman from here on out, it's not like he's going to be giving back all those 10s of millions of $$$, so from his perspective, he's a genius!
Iipoed 12/4/2012 | 10:00:21 PM
re: Grubman's Last WorldCom Call Said it before:
Those who can't be sales engineers become salespeople
those who can't sell go into marketing
those who can't market become consultants
those who can't consult become industry analysts
next is working for a VC and finally big eight accounting firms.
willywilson 12/4/2012 | 10:00:20 PM
re: Grubman's Last WorldCom Call Sorry to say it, but had Jack Grubman not existed it would have been necessary to invent him. There's always someone willing to reap the rewards for being the point-man on the latest pyramid scheme. And no matter what happens to Grubman from here on out, it's not like he's going to be giving back all those 10s of millions of $$$, so from his perspective, he's a genius!

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Bingo! Guess who will laugh his way all the way to the bank?
willywilson 12/4/2012 | 10:00:20 PM
re: Grubman's Last WorldCom Call The amazing thing was that so many analysts were willing to suspend their belief in basic economics. Things like "supply and demand" just never came up in the conversation, or so it would seem.

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You seem to be under the impression that analysts were expected to make accurate stocks picks.
willywilson 12/4/2012 | 10:00:20 PM
re: Grubman's Last WorldCom Call Jack Grubman is the worst. He reportedly flunked his written tests, lied that he was from MIT while he actually graduated from Boston University and still made about 20 million/yr last year.

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Jack Grubman is the worst ... what?
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