Former Compaq Computer Corp. and Hewlett-Packard Co. boss Michael D. Capellas was named Friday as chairman and chief executive of troubled WorldCom Inc., the telecommunications giant that that admitted a $9 billion accounting fraud and is mired in the biggest bankruptcy in U.S. history.
Capellas takes over the top two jobs at the parent of the nation's second-largest telephone company MCI Communications Corp., as WorldCom tries to reorganize its operations, overhaul its accounting, remake its corporate image and remain a strong competitor in the slumping telecommunications industry.
MCI has an operations center in Hunt Valley.
"I see this as a great opportunity," Capellas said. "I look forward to hitting the ground running."
At a news conference in New York, Capellas said WorldCom remained a great company whose "business model got a little messed up" -- adding that he would improve the company's operations, ethics and technology.
Capellas' selection had been rumored widely after he stepped down this week as president of Hewlett-Packard, which bought Compaq Computer for $19 billion in May.
He has been chairman and CEO at Compaq before the deal.
Capellas replaces John W. Sidgmore as chief executive at WorldCom, based in Clinton, Miss. The telecommunications provider sought bankruptcy protection in July. Bert C. Roberts had been chairman.
Sidgmore has been considered an interim replacement for WorldCom founder Bernard J. Ebbers, whose high-flying ways have made him one of the central characters in the telecom industry's bust.
Capellas, 48, said in a statement that he "took this job because I am convinced that WorldCom has the assets, the customers and the people to regain a leadership role in this industry.
"In order to do this, we must first regain trust and win respect," the statement said. "Accordingly, together, we will rebuild WorldCom into a model of good corporate governance and management integrity," he said.
Terms of Capellas's compensation are subject to court approval. Judge Jed Rakoff of U.S. District Court in Manhattan is expected to review the compensation package on Friday.
Rakoff is overseeing the Securities and Exchange Commission's fraud lawsuit against WorldCom, one of multiple securities and fraud charges facing the company.
Some telecommunications industry analysts and WorldCom observers have debated whether Capellas, with his lack of telecom experience, is the right choice and urged the company to make a clean sweep of its directors and top management.
Capellas' resume reflects his long career in information technology but no direct telecom experience.
He spent 16 years with oilfield services giant Schlumberger Ltd. in an array of tech-related management positions. He also worked at SAP America Corp. and Oracle Corp., where he led the software maker's sales to oil-and-gas companies, before joining Compaq as chief information officer.
But Sidgmore said in the statement that Capellas was the company's top candidate.
"His acceptance of our offer confirms our optimism about the future of our company," Sidgmore said.
The head of the WorldCom creditors' committee, Irwin Gold, said in the statement the panel "fully supports and endorses the appointment."
WorldCom declared debts of $41 billion when it filed for Chapter 11 and may have to sell off important assets to satisfy creditors.
Rival providers of corporate telecom services, including AT&T Corp. and Sprint Inc., claim to be winning customers who fear WorldCom's instability.