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WorldCom's Last Hope?

With time running out, John Sidgmore must move fast. Saving the company will require deep cuts.

Tuesday, June 18, 2002
(7:15 AM ET)
By Keith Epstein
Special to Washington Techway

Image Credit: Welton Doby III -- Business Forward.

"He has trouble accepting that he's an icon," observes Jagemann. He wants to know who's having a baby shower. He demands that executives play cards after hours, or at least put $50 in the pot. At UUNet, he called it "poker with the president," a management tool that encourages communication and strong relationships. But it's also a chance at ordinary life. Says Jagemann: "He wants badly to be the regular guy."

Five weeks ago, as John Sidgmore ran into Fresh Fields to buy salmon for his wife, one of his eight cell phones rang. He simply hates being out of touch. Natural enough for an Internet legend. The many networks Sidgmore either built or bought now ferry more than half the globe's electronic voice and data traffic.

As if personifying those circuits, he is perpetually in motion. He gets by on three hours sleep, generally working the other 21. He keeps himself energized with a dozen cups of coffee a day - down from 20 a year ago - and by strumming to Dylan and rocking to U2. He'll frequently call his closest advisers to discuss tactics or test an idea - at 2 or 3 a.m.

Even at golf, Sidgmore has no patience for putting, chipping or small talk. The famed course at Avenel in Potomac, with its spotty phone reception, drives him nuts. Getting to the green - that's enough for John Sidgmore. Then it's time to move on. Take another long shot.

"John," the voice on the phone said, urgently. "It's looking like the board might throw Bernie out."

That would be Bernie Ebbers, the former college basketball coach in cowboy boots with whom Sidgmore quickly transformed WorldCom from a passing notion in a Mississippi coffee shop into the nation's second-largest long-distance telephone and data services company.

Even faster, the company became emblematic of these imploding times - another corporate flameout, another telecom tragedy, another Wall Street favorite drowning in debt, its bonds downgraded to "junk" as analysts, fretting over revenue, let out a chorus of "sell!" and share prices suffered near-death experiences. Accounting for acquisitions, and personal loans to Ebbers, raised suspicions. Securities cops were circling. The spiral threatened to take the ship down.

The call that day from WorldCom's vice president and general counsel, Mike Salsbury, was an SOS.

"Some people on the board think you're the only chance we've got," Salsbury continued. "We can't do a search. There's no time for that. There are lots of organizational and financial problems. You're the only one who knows the company. And you're the only one who is a brand on Wall Street."

The brand was stunned.

Among geeks, venture capitalists, analysts and business journalists alike, he is a hero, as befits one of the Internet's founding fathers and the tech era's princes of acquisition. He had, in only a few years, fashioned UUNet Technologies, a little-known nonprofit, into a billion-dollar Internet backbone. When the Falls Church company went public in 1995, it instantly created 25 millionaires. Within a few months of 1996, he had sold UUNet to MFS Communications for $2 billion, then to WorldCom for $14 billion. That made more millionaires and multimillionaires, and some very happy investors.

Like so many titans of tech, he and Ebbers just kept going. Higher-priced shares begat more acquisitions, and more acquisitions begat higher-priced shares. So long as companies could be acquired, it seemed, there were deals to be made. During a five-year global buying binge, Sidgmore and Ebbers cobbled together 78 companies, catapulting WorldCom into the telecom firmament.
(Page 1 of 6: WashingtonPost.com News Source)
2002 © Washtechway.

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