Between 1999 to 2002, WorldCom overstated its pretax income by at least $7 billion.

The largest deliberate miscalculation in the history.

Write down 82 billion of its reports assets.

Stock value from $180 to nearly worthless

Employees lost job, and worthless retirement account

The bankruptcy influence 20 million retail customer.

On government contracts, affect 80 million social security beneficiaries.

Background

Line-cost expenses are a significant cost for all long-distance carriers

The LDDS started with 650 thousands, accumulated 1.5 million in debt, the company lacked the technical expertise to handle the accounts of large companies that had complex switching systems.

Ebber lacked technology experience

Ebber focused young firm on internal growth, acquiring small long-distance company to gain larger shares.

LDDS grew rapidly through acquisitions across the American South and West and expanded internationally through acquisitions in Europe and Latin America.

In 1989, LDDS became a public company through a merger with Advantage Companies, a company that was already trading on Nasdaq. By the end of 1993, LDDS was the fourth-largest long-distance carrier in the United States. After a shareholder vote in May 1995, the company officially became known as WorldCom.

In 1996, WorldCom entered the local service market by purchasing MFS Communications Company, Inc., gave WorldCom a substantial international presence and a large ownership stake in the world’s Internet backbone

In 1997, WorldCom used its highly valued stock to outbid British Telephone and GTE (then the nation’s second-largest local phone company) to acquire MCI, the nation’s second-largest long-distance company. The $42 billion price represented, at the time, the largest takeover in U.S. history.

WorldCom’s integrated service packages and its Internet strengths