RE: Just keep telling yourself, "Worldcom won't fail, Worldcom wo n't fail"

What is the reasoning for thinking that WorldCom may fail? Is there
something that I've missed?

What is the reasoning for thinking that WorldCom may fail? Is there
something that I've missed?

They've laid a lot of people off, and according to the online Wall
Street Journal (costs money but is worth it) they would have major
negative cashflow if it weren't for all the money they're borrowing.
If Wall Street gets nervous, they're hosed.

Also, Bernie Ebbers has sweetheart deals with the company that would
make Ken Lay blush, which is not a good sign. Tuesday's WSJ (both
paper and online) said:

Few ordinary mortals enjoy a lender as generous as Bernard
J. Ebbers's. But Mr. Ebbers is no ordinary guy. The brash chief
executive of WorldCom Inc. transformed an obscure reseller of
long-distance calls into a New Economy powerhouse. WorldCom's shares
made him a billionaire when they hit a high of $64.50 in June 1999.

Since then, the shares have plunged, leaving Mr. Ebbers owing
WorldCom about $341 million to cover loans he took to buy its
shares. The Clinton, Miss., concern has stepped in to cover a loan of
$198.7 million that he owed Bank of America and the company
itself. He also has used $142.5 million of a $165 million credit line
extended by WorldCom. That loan bears interest of less than 2.2% --
the company's own rate for borrowing.

Mr. Ebbers, who owned about 17 million shares and 8.3 million stock
options as of a March 2001 regulatory filing, has offered his stake
as collateral. He can't sell the stock without WorldCom's
permission. He recently said he had assets "that are more than
sufficient to cover the debt and those are for sale now." He declines
to identify those assets.

"This is more of a personal piggybank for one man," contends Brian
Foley, an executive-pay consultant in White Plains, N.Y. "He's
gotten well beyond what they would have done for anybody else."

WorldCom, which has laid off about 9,000 workers since January 2001,
began lending Mr. Ebbers money in fall 2000 after he was forced to
sell three million shares to cover a margin call on WorldCom
stock. Mr. Ebbers didn't want to have to sell more WorldCom shares,
which could hurt the stock price. "He takes his loan from the company
very seriously," says Brad Burns, a WorldCom spokesman. "Mr. Ebbers,
more than anyone, has a huge personal stake in greatly improving
WorldCom shareholders' value."