CLINTON, Miss. – Bernard Ebbers, the brash executive who built WorldCom Inc. (WCOM) from a sleepy phone company into one of the world's top telecommunications firms, has resigned, bowing to a plummeting stock price and a government probe of company support of his personal finances.
Ebbers, 60, who is relinquishing posts as president, chief executive and board member, will be succeeded by 51-year-old Vice Chairman John Sidgmore, the company, based in Clinton, Mississippi, said in a statement. Sidgmore has taken a back-seat role for about the past year, after having run the company's Internet arm, UU-Net.
Just two years ago, Ebbers' WorldCom was among the highest-flying firms competing in the heady telecoms arena. But the costs of aggressive expansion -- largely through dozens of acquisitions -- and the rapid, global downturn in the telecommunications market undercut the company's growth.
Then, as the stock price -- which topped out above $64 a share in 1999 -- continually eroded, questions began surfacing about the company's $366 million in personal loans to Ebbers, a relationship that has led to a broad investigation by the U.S. Securities and Exchange Commission.
In premarket trading following the announcement, WorldCom shares rallied nearly 13 percent to $2.65.
The stock closed Monday at $2.35 on Nasdaq, having fallen nearly 30 percent on the day. The stock has fallen more than 80 percent since January.
Its bonds have also taken a hit, as investors fret that the prospects may be strong for default on its $30 billion debt. Its 10-year and 30-year bonds fell 10 cents on the dollar on Monday to below 50 cents.
Bert Roberts, the former head of MCI Communications, the long-distance telephone company WorldCom bought in 1998, will remain chairman of the board.
In other changes, WorldCom said Chief Financial Officer Scott Sullivan has been named an executive vice president.
Ronald Beaumont, who has been chief operating officer of WorldCom Group, the data and business services side of the business, has been named chief operating officer of WorldCom Inc. In that role he will oversee both WorldCom Group and MCI Group , the residential long-distance business.
Wayne Huyard remains COO of MCI Group, reporting to Beaumont, the company said.
"While our industry has been buffeted by the economic downturn in recent months, WorldCom is well positioned to capitalize on an economic upturn," Sidgmore said.
Get all the stories you need-to-know from the most powerful name in news delivered first thing every morning to your inbox