Way back in 1998 when the economy still was new, WorldCom CEO Bernie Ebbers was clinching his acquisition of long-distance giant MCI, and the Rev. Jesse Jackson had a bone to pick with him. Speaking at Tougaloo College--a cradle of the civil rights movement located near Clinton, Miss., where WorldCom is headquartered--Jackson rhetorically asked his audience why Ebbers could afford $37 billion for MCI but hadn't donated funds to local black students. Ebbers wasn't present, but LeRoy Walker Jr., a leading black businessman and Tougaloo board member, pulled Jackson aside to set him straight: Ebbers had given Tougaloo more than $1 million along with new information technology. Ebbers had also helped Walker purchase a country club and computers to be used by disadvantaged black youth. "Bernie Ebbers," Walker told Jackson, "is my mentor."
Jackson was won over: yet another of Ebbers' conquests. Ebbers' entrepreneurial vision, friends insist, involved not only stringing together scores of lucrative telecom companies--amassing what is today the nation's second largest long-distance firm--but also helping bridge the racial and economic divides that continue to plague Mississippi. A transplanted Canadian, Ebbers, 60, teaches Sunday school at his Baptist church each week, serves meals to the homeless at Frank's Famous Biscuits in downtown Jackson, Miss., lives modestly in a prefab home, wears jeans and boots to the office and has poured almost all his once considerable fortune back into his company. Walker says Ebbers "is too committed not to make a comeback."
Right now, though, it's hard to find a Friend of Bernie outside Mississippi. When Ebbers, under pressure from WorldCom's board, announced his resignation last week, the company was sinking under $28 billion in debt, a shriveling stock (which closed at $1.79 last week after peaking at $64.50 in mid-1999) and a Securities and Exchange Commission probe into the more than $400 million that WorldCom recently loaned or guaranteed to loan to Ebbers at a charitable 2.15% interest rate. Many disgruntled WorldCom execs were hoping that the new CEO, John Sidgmore, would run the company not from Clinton but from the MCI division offices in Ashburn, Va.
WorldCom, like much of the U.S. telecom industry, looks as broken as a coin phone in a bus station. And so, sadly, does the executive image of Ebbers, who was once the refreshing antithesis of New Economy slick. "I am not a technology dude," he has boasted. But he has slipped nonetheless onto the crowded pyre of '90s corporate excess. "I feel like crying," Ebbers told a Jackson TV station after his resignation last week. "But I am 1,000% convinced in my heart that this is a temporary thing."
Friends and analysts alike agree that it's that kind of optimism that drove both Ebbers' triumph and his downfall. Although he was rated by Forbes in 1999 as one of the 200 richest Americans, with a $1.4 billion net worth, his fortune is in peril. At a time when other infamous chief executives have covertly jettisoned their company stock, he has stubbornly held on to his 27 million shares of WorldCom, many of them bought with margin loans. WorldCom executives say privately that Ebbers agreed to resign largely so he could focus on selling off real estate assets, perhaps even his beloved $60 million ranch in British Columbia.