RHK: No Bailout for WorldCom

First, WorldCom’s self-inflicted damage should not be repaired when its competitors are trying to run honest operations and would not benefit from rescue attempts.

Second, rescuing WorldCom would bring back to life a firm with significant unresolved inefficiencies. Many of the company's financial woes stemmed from its focus on increasing top-line revenues via acquisitions, rather than on the more complex, less glamorous task of integrating these operations.

Third, the industry needs capacity to disappear. Over-investment during telecom’s bubble years has created a surfeit of capacity and service providers. The recycling of assets from bankrupt service providers is an astonishing way of preserving the industry’s pain.

Fourth, there may well be further rot to find, as suggested by the recent announcement of an additional $3.3 billion of misreported expenses on top of the $3.8 billion already revealed.