Worldcom Research Paper

Worldcom Research Paper-37
These newly classified assets were expenses that World Com paid to lease phone network lines from other companies to access their networks.They also added a journal entry for 0 million in computer expenses, but supporting documents for the expenses were never found.

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The low margins that the industry was accustomed to weren't enough for Bernie Ebbers, CEO of World Com.

From 1995 until 2000, World Com purchased over sixty other telecom firms. World Com moved into Internet and data communications, handling 50 percent of all United States Internet traffic and 50 percent of all e-mails worldwide.

This was a monumental task, at one point utilizing an army of over 500 World Com employees, over 200 employees of the company's outside auditor, KPMG, and a supplemental workforce of almost 600 people from Deloitte & Touch.

As Joseph Mc Cafferty notes, "(a)t the peak of the audit, in late 2003, World Com had about 1,500 people working on the restatement, under the combined management of Blakely and five controllers…(the t) otal cost to complete it: a mind-blowing $365 million"(Mc Cafferty, 2004).

Ebbers was found guilty on all counts in March 2005 and sentenced to 25 years in prison, but is free on appeal.

Sullivan pleaded guilty and took the stand against Ebbers in exchange for a more lenient sentence of five years.

In 2000, World Com began classifying operating expenses as long-term capital investments.

Hiding these expenses in this way gave them another .85 billion.

In December 2005, two years after this case was written, the telecommunications industry consolidated further.

Verizon Communications acquired MCI/World Com and SBC Communications acquired AT&T Corporation, which had been in business since the 19th Century.

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