Ebbers out at WorldCom; Sidgmore takes helm

Under intense pressure from shareholders dissatisfied over a falling stock price and an SEC investigation, WorldCom President and CEO Bernard Ebbers announced his resignation today. Replacing Ebbers will be longtime WorldCom executive John Sidgmore, currently the company’s vice chairman.

Though the company has been faltering lately, Ebbers’ resignation comes as somewhat of a surprise. He built the company from a regional long-distance provider into one of the world’s largest communications carriers via a string of aggressive acquisitions beginning in the mid-1990s, including its purchase of the nation’s second-largest long-distance carrier, MCI, in 1998.

Recently, though, the company’s fortunes have soured. While it traded above $60 during the late 1990s, the company’s stock has taken a severe beating, especially over the past several weeks. It is now trading at less than $3 per share while trying to squelch speculation that it may default on its debt payments.

The company is also the subject of a broad investigation by the Securities and Exchange Commission, and Ebbers has personally come under fire for receiving a $341 million loan from the company to cover personal obligations.

Expected to pick up the pieces is Sidgmore, who first came to the company as a result of WorldCom’s acquisition of MFS Communications in 1996.

According to Sidgmore, his first 30 to 60 days on the job will be spent reevaluating the company’s worldwide assets.

“We’ve gone through something like 65 acquisitions in the last five or seven years,” he said. “We’ve acquired some new technologies that may or may not be strategic to us. We’re going to take a full review of our global assets to determine which are our core growth assets.”

Those assets that are not deemed to be part of the company’s core holdings will likely be sold off.

Another of Sidgmore tasks will be to calm investors’ fears about WorldCom’s liquidity. While worries that the company may default on its loan payments and be forced into Chapter 11 spread, Sidgmore asserts that bankruptcy is not a possibility.

“We don’t believe that there is any way under any scenario that we’re going to run out of cash in the foreseeable future,” he said.