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Avow or Avoid?: The Public Communication Strategies of Enron and WorldCom
Unformatted Document Text:  Avow or Avoid? 5 transactions (Enron announces, Oct. 22, 2001). Within days, Enron announced that Jeff McMahon was replacing Andrew Fastow as CFO (Enron names Jeff McMahon, Oct. 24, 2001). With its stocks in a free fall on the market, Enron entered into merger talks with Dynegy Inc., a smaller energy competitor. When those talks broke down, Enron filed for Chapter 11 bankruptcy protection on December 2, 2001 (Enron files, Dec. 2, 2001). WorldCom WorldCom had an unassuming beginning when, in 1983, Bernard J. Ebbers and three business partners sketched out on a diner napkin in Hattiesburg, Miss., a plan for a long-distance telephone company (Goodman & Merle, June 30, 2002). Long Distance Discount Services (LDDS) was born. “LDDS became a publicly traded business in 1989 when it merged with one, Advantage Companies Inc. By 1995, Ebbers had gobbled up more than 35 companies, mostly small, underfunded competitors of AT&T. Earlier that year, he added Williams Telecommunications Group LLC, securing its 11,000-mile fiber-optic network. He was no longer simply connecting voice telephone calls. Now he was moving ‘data,’ the electronic bits of commercial transactions and the Internet. The company changed its name to WorldCom” (Goodman & Merle, June 30, 2002). Based in Clinton, Miss., WorldCom had unbridled growth. Ebbers specialized in gobbling up companies – 60 in all. In 1998 alone, WorldCom bought MCI Communications Corp., Brooks Fiber Properties Inc., and CompuServe Corp. A bid to buy Sprint in 1999 was blocked by the government and led to the disclosure that rampant acquisitions had led WorldCom to have a staggering debt that it was having difficulty meeting (Kaplan, June 27, 2002). In March 2002 the SEC began investigating WorldCom accounting practices and loans made to officers. On April 30, 2002, Ebbers resigned as CEO in the face of dropping share

Authors: Reber, Bryan. and Gower, Karla.
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Avow or Avoid?
5
transactions (Enron announces, Oct. 22, 2001). Within days, Enron announced that Jeff
McMahon was replacing Andrew Fastow as CFO (Enron names Jeff McMahon, Oct. 24, 2001).
With its stocks in a free fall on the market, Enron entered into merger talks with Dynegy
Inc., a smaller energy competitor. When those talks broke down, Enron filed for Chapter 11
bankruptcy protection on December 2, 2001 (Enron files, Dec. 2, 2001).
WorldCom
WorldCom had an unassuming beginning when, in 1983, Bernard J. Ebbers and three
business partners sketched out on a diner napkin in Hattiesburg, Miss., a plan for a long-distance
telephone company (Goodman & Merle, June 30, 2002). Long Distance Discount Services
(LDDS) was born.
“LDDS became a publicly traded business in 1989 when it merged with one, Advantage
Companies Inc. By 1995, Ebbers had gobbled up more than 35 companies, mostly small,
underfunded competitors of AT&T. Earlier that year, he added Williams Telecommunications
Group LLC, securing its 11,000-mile fiber-optic network. He was no longer simply connecting
voice telephone calls. Now he was moving ‘data,’ the electronic bits of commercial transactions
and the Internet. The company changed its name to WorldCom” (Goodman & Merle, June 30,
2002).
Based in Clinton, Miss., WorldCom had unbridled growth. Ebbers specialized in
gobbling up companies – 60 in all. In 1998 alone, WorldCom bought MCI Communications
Corp., Brooks Fiber Properties Inc., and CompuServe Corp. A bid to buy Sprint in 1999 was
blocked by the government and led to the disclosure that rampant acquisitions had led
WorldCom to have a staggering debt that it was having difficulty meeting (Kaplan, June 27,
2002).
In March 2002 the SEC began investigating WorldCom accounting practices and loans
made to officers. On April 30, 2002, Ebbers resigned as CEO in the face of dropping share


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