Why can’t phone companies go straight?

by philg

An interesting juxtaposition… from a couple of months ago:



[Bernard Ebbers,] The ousted chief executive of a giant telecommunications company rocked with an accounting scandal told his congregation on Sunday that he was innocent of wrongdoing. Appearing at Easthaven Baptist Church in Brookhaven, Miss., as usual to teach Sunday school and attend the morning worship service, Bernard Ebbers made his first public comments about WorldCom since the disclosure of $3.8 billion in improper accounting last week, The Wall Street Journal reported.”I just want you to know you aren’t going to church with a crook,” Ebbers addressed the congregation at the end of the service.


And from today’s London Times:



BERNIE EBBERS, the former chief executive of WorldCom, faces the rest of his life in jail after being found guilty of orchestrating the biggest fraud in American corporate history.  … The jury of seven women and five men found Ebbers guilty on all counts in a Manhattan court.


Why is it that phone companies are always defrauding either customers or investors or both? 

5 thoughts on “Why can’t phone companies go straight?”

  1. Well, at least phone companies are only defrauding their customers.  Pharmaceutical companies are killing theirs.

  2. You have to think they’ve pretty much figured out all the ways to make money in telecom. You can have a perfectly profitable business, but the only thing that makes Wall Street happy is steadily *increasing* revenue. Unfortunately, there are some quarters where revenues don’t increase, though you may be running a perfectly profitable business. So in order to keep those stock prices rising (which Ebbers was pretty maniacal about), many have to resort to skirting the truth.

  4. Good link Chris. Amazing. I wonder if Ebbers and Nacchio saw the writing on the wall way back with the downfall of Enron. And to think it all started with Enron (remember, not only were they an energy company but they also had aspirations of entering crossing over into telc realm). I recommend reading “The Smartest Guys in the Room” for an (extremely) in-depth look at some of the shenanigans convicted former Enron CFO Andy Fastow pulled to get an understanding of the accounting practices used by these firms.

    The scary thing is that stuff like this has probably been pulled for years, only then, they could depend on earnings to (eventually) save their skins. But when the bubble burst, everything fell apart before they could replace the carefully balanced cards holding up their earnings with brick and cement.

  5. Going by your title, if a company is caught cooking the books, we can call it “coming out” and a company with a clean record is “Straight”. Like,

    This just in, Acne corporation today “Came out” today with a Zillion dollar accounting scandal….HA HA HA !!!

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