Worldcom group, part of MCI Empire is falling fast. The once respected telecommunications company’s stock has fallen from $14.00 a share to under $2.00 this year alone. This is could be another example of tricky accounting, and shareholders losing fortunes.
In January 2002 it was reported that Bernie Ebbers’, then the CEO of Worldcom, had a $183 million dollar loan secured on 11.3 million shares. The price of Worldcom stock had fallen dramatically and Bank of America called in the loan. There was one glitch – Worldcom guaranteed the loan than Bank of America made to Ebbers. At the time Worldcom had a market capitalization of over $25 billion dollars.
Just four months later the stock price is down 80% from January, the market cap is now at $5.5 billion dollars. In early May 2002 Ebbers resigned is post at Worldcom. The SEC is investigating $366 million in loans from Worldcom to Ebbers to cover his margin calls/loans.
Chart prepared using Quote.com's QCharts.
Daily Chart of Worldcom (NASDAQ: WCOM) |
The Short Term Trading Method issued a sell signal in early December 2001 at $15.08 per share.
Worldcom closed on May 2, 2002 at $2.04 per share.
A short position would have gained 86% over this period.
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