Sidgmore Takes Control at WorldCom
In light of WorldCom's recent troubles, the departure of Ebbers is no surprise. On a conference call Tuesday, Sidgmore delicately explained why WorldCom needs a new face in the CEO seat: "In terms of restoring credibility I, and the management team, might be able to make a difference.
"I'm not here to say today that I'm here to single-handedly turn this thing around... I am saying that the company has a more negative look and feel than it deserves."
Indeed, with Sidgmore, WorldCom is getting a respected corporate dealmaker of the highest order. "One of the most important things I can add to the mix is to try and create larger partnerships with large companies," he says.
Sidgmore also pledges to evaluate all of WorldCom's assets around the world in order to figure out which businesses the company needs to be in and which it needs to back away from. Noting that he's not a financial wizard, Sidgmore says that his reason for being at WorldCom "is to find new growth opportunity."
Ebbers became CEO of WorldCom (then known as Long Distance Discount Services [LDDS]) in 1985. His previous jobs included car salesman, high school basketball coach, club bouncer, and motel owner, according to a Hoover's profile. LDDS changed its name to WorldCom in 1995, and Ebbers oversaw more than 60 acquisitions during his tenure there in the 90s.
As WorldCom went sliding into the current recession with a heavy debt load, however, its empire began to come apart. Ebbers found himself getting defensive. "To question WorldCom’s viability is utter nonsense,” he told investors during a February conference call (see WorldCom's Ebbers Stands Firm).
But investors keep right on questioning, as the company's financial outlook remains grim for at least the remainder of the year. Its stock price has dropped from the low double-digits to less than $3 a share so far this year, as investors worry whether the company can manage the debt it incurred during years of unbridled growth (see WorldCom's Woes Mount). WorldCom has also shrunk in size from 80,000 employees early last year to about 71,000 now (see WorldCom Cuts Jobs, Gets Lower Ratings).
As if that weren't enough, WorldCom is being investigated by the Securities and Exchange Commission (SEC) concerning several accounting issues and its $341 million in loans made to Ebbers, who owed millions to banks after the company shares he had bought on margin lost most of their value (see WorldCom Accounting: What's Up?). Ebbers recently sold his yacht, dubbed "Aquasition," and other assets to help repay what he owes WorldCom, according to USA Today.
Sidgmore also comes from a history of high-growth service provider jobs, but his star hasn't been tarnished by WorldCom's plummeting public perception. He has been vice chairman of WorldCom since 1997, when the firm completed its $14 billion acquisition of MFS Communications (which never turned a profit). He became president of MFS when that company bought his prior employer, UUNet (also unprofitable at the time), for $2 billion in 1996. At press time, Sidgmore was also a partner at New Enterprise Associates (NEA), and he serves on the board of Zhone Technologies Inc.
Despite taking the company's top job, Sidgmore says he's not moving near its headquarters in Mississippi. "Being from New Jersey, I don't think I could live in Mississippi," he says.
— Phil Harvey, Senior Editor, Light Reading