CLINTON — The much-anticipated WorldCom annual meeting, scheduled for May 23 at the company headquarters in Clinton, has been postponed as its leaders confer on a new game plan.
“We do not know when the annual meeting will be rescheduled,” said WorldCom spokesperson Claire Hassett. “It will be sometime this summer.”
Nancy Anderson, CFA, president of New Perspectives Inc. in Clinton, said she was concerned the location would change.
“Some shareholders, even those who have never gone, told me they wanted to go to this meeting because they were in love with the stock,” she said. “They wouldn’t consider selling the stock because it was here or they knew Bernie or had connections with him. There is more interest in being able to hear comments and ask questions.”
Rumors have swirled that WorldCom headquarters would be relocated to its 532-acre Ashburn campus in Loudoun County, Va., 30 miles west of Washington, D.C. Only 1.4 million of the 2 million square feet built on the Ashburn campus is occupied; the site has been approved for 7.4 million square feet. WorldCom CEO John W. Sidgmore, who lives in the Washington, D.C. area, has said he would not move to Clinton.
“We’re not moving the headquarters,” said Hassett. “We’ve leaving the headquarters in Clinton.”
WorldCom stock has continued to flounder even after longtime WorldCom CEO Bernie Ebbers, 60, resigned April 30 under intense pressure as the company’s stock fell below $3 a share, down nearly 80% since January. Its bonds were trading at less than 50 cents on the dollar. At press time (May 10), WorldCom stock had dropped to $1.58 a share.
Mark Pollock of Jackson, who owned WorldCom stock for several years, sold his shares earlier this year.
“I went from a $55,000 profit to a $3,500 loss,” he said. “I rode it like the Titanic.”
Ebbers acquired 75 companies in 19 years that moved WorldCom into the nation’s second-largest long-distance company. Many analysts have said that WorldCom’s demise began in 2000, shortly after U.S. and European regulators thwarted the company’s planned $152 billion merger with Sprint, the nation’s third-largest long distance carrier.
Earlier this month, bond ratings agency Moody’s downgraded WorldCom’s $29 billion of debt to junk rating, meaning it believes WorldCom may be unable to pay its debts over the next several years. Days before, WorldCom was hit with a class-action lawsuit on behalf of shareholders. The company continues to be under scrutiny by the Securities and Exchange Commission for its accounting practices and a $366-million personal loan to Ebbers, who has said the loan would be repaid by 2007.
“I think what bothered most people more than anything were the personal loans to him from the company, even though realistically it was not that big of a deal for the company itself to take that on and it did make sense,” said Anderson.
Competition has been driving down data-service fees, and WorldCom Group’s revenue growth dropped from 19% in 2000 to nothing this year. By 2003, the Bells will have nationwide access to the company’s long-distance voice and data market. WorldCom’s Neighborhood Plan, offering unlimited local and long distance for $50 to $60 a month to consumers in 32 states, may squelch their gain.
“Mr. Sidgmore has made it one of his top priorities to reach out to our larger business customers and meet with them, get to know them and explain to them our financial realities versus the perceptions out there,” said Hassett. “Our customer base has been steady.”
The new management team is currently reviewing the company’s assets to determine which should be sold. WorldCom, which has an untapped $8-billion bank credit line, has $29 billion in debt that begins coming due in 2003.
“Ebbers’ philosophy was to never sell anything,” said Sidgmore, who has shrugged off bankruptcy talk. “My philosophy is that you need to continually evaluate your assets and sell those that aren’t working out.”
If pressured, Sidgmore may have to sell UUNET Technologies Inc., an Internet backbone company, where he was president and CEO before joining WorldCom in 1996.
That probably won’t happen, said Anderson.
“It’s probably their most valuable piece, especially with Sidgmore taking over,” she said. “That was his baby.”
According to a Goldman Sachs conference call earlier this month about WorldCom’s first quarter earnings, the company has more than $2 billion in assets tied up in Brazil and other non-core businesses that could be liquidated, said Ram Kasargod, CFA, a senior analyst with Morgan Keegan in Memphis.
“I don’t think they plan to do anything near-term because the telecom environment is still so horrible,” he said. “It is not going to be easy to sell assets in telecom today. Waiting until the timing is right is the rational thing to do.”
Among other issues, investors at the shareholders meeting want to know:
• How is the economic cycle impacting the company?
• How will WorldCom meet its debt repayment schedule?
• How is the company adjusting to competition?
• What is the status of the SEC inquiry?
• What is WorldCom’s relationship with bank lending groups?
“The stock will only get to higher levels if the issues everyone is concerned about are successfully addressed,” said Kasargod.
Institutional investors probably won’t bother to attend the meeting, he said.
“Most shareholder meetings have been heavily attended by retail shareholders who live in Mississippi,” he said. “Institutional ownership of the stock has been coming down for the last year to 18 months. Part of the reason is because telecom has become a cautious sector and institutional investors have been focused on other sectors.”
An agenda has not yet been determined for the shareholders meeting, said Hassett.
“At this point, I really don’t know what it will be,” said Hassett.
Ebbers, the largest WorldCom shareholder, now works as a consultant from the Amite Street office in downtown Jackson. He could not be reached for comment for this story.
Contact MBJ contributing writer Lynne W. Jeter at (800) 993-3392 or firstname.lastname@example.org</a.