Virginia Town Awaits Fate of WorldCom
Heralding WorldCom Inc.’s decision to build a massive campus amid farm fields here, then-Gov. James S. Gilmore III of Virginia plunged a shovel into the ground in 1998 and predicted that the company’s arrival would drive “growth and profits” in the region for years to come.
But four years later--after an accounting scandal forced WorldCom to seek the biggest bankruptcy in U.S. history on July 21--shell-shocked employees are circulating their resumes and the Clinton, Miss.-based company is trying to unload billions of dollars worth of assets, including some of the real estate holdings on this 590-acre site.
In recent months, WorldCom’s Ashburn campus--so large that it has its own bank, dry cleaner and restaurants--has seen a series of layoffs and downsizings that has left the employee parking lot nearly half empty.
“Everyone I know is worried about losing their job,” said one WorldCom employee. “This has been such a roller-coaster ride--up and then down, down.”
Even nearby merchants such as Benny Scotto, manager of Pomodoro pizza parlor across the street, are worried about their future.
“People who came to this area early” cashed in on the soaring housing values and robust economy that was fueled by the opening of WorldCom’s campus, Scotto said. “Those who came late like me are now paying the price.”
Along with neighbor AOL Time Warner Inc., the arrival of WorldCom, its MCI long-distance telephone subsidiary and its UUNet high-speed data network unit helped make Northern Virginia a high-tech mecca. The region eventually lured about 2,500 computer and telecommunications firms, including Internet domain name issuer Verisign Inc. and wireless phone provider Nextel Communications Inc.
With the influx of companies, job growth spurted. At its peak, Virginia’s high-tech industry employed more than 350,000 people. Gilmore dubbed his state the “Silicon Dominion” and boasted that the arrival of behemoths such as WorldCom and AOL could enable Virginia to one day eclipse California’s Silicon Valley as the premier high-tech destination.
Instead, the state has seen a high-tech meltdown. Dozens of onetime stalwarts such as Internet access provider PSINet Inc.--which once had its name plastered across the football stadium where the Baltimore Ravens play--and wireless phone provider Teligent Inc. filed for bankruptcy protection.
The latest casualty, WorldCom, was once the highest-flying company in telecommunications. And its financial woes have hit hard the company’s remaining 3,500 employees in Ashburn, many of whom had become true believers in Chief Executive Bernard J. Ebbers’ decade-long campaign to gobble up new acquisitions and deliver double-digit growth.
Analysts and former WorldCom employees say the company’s bankruptcy filing symbolizes the end of an era of robust telecommunications competition that saw long-distance phone rates plunge 40% and the emergence of more than 4,000 Internet service providers.
The founder of WorldCom’s MCI unit, William McGowan, is credited with spurring the modern telecommunications era with a take-no-prisoners marketing campaign that opened the way for MCI--and later upstarts such as WorldCom--to challenge AT&T; Corp.’s dominant role in the industry.
By 1998, MCI was such a force that it commanded a $40-billion price tag when WorldCom bought the company in a deal that experts predicted would reshape the telecommunications landscape.
Now, with WorldCom, Global Crossing Ltd., Qwest Communications International Inc. and others in financial straits, industry observers say McGowan, who died in 1992, would have been aghast at what has become of the telecommunications revolution he started in the early 1980s.
“That visionary fighter for competition would be rolling over in his grave” at the thought of his company having to file for bankruptcy protection, said Scott C. Cleland, a telecommunications analyst at Washington research firm Precursor Group.
Added David Thompson, a former WorldCom spokesman who is a consultant in Bowie, Md., “This whole thing with WorldCom has caused a lot of anxiety and bad taste in the mouths of investors and employees alike.”
None of the two dozen WorldCom employees approached at WorldCom’s Ashburn campus would comment for the record. But many said the mood among employees ranged from bitterness to hope that new CEO John W. Sidgmore can revive the company.
“This all just seemed to come out of nowhere,” said one woman, who has worked at WorldCom for about 2 1/2 years. “No company is without problems, but it seems the higher-ups didn’t want to deal” with the financial problems earnestly and early on.
“Being laid off is always difficult and hard, and my heart goes out to the workers,” said Mark. R. Herring, a Loudoun County supervisor who represents the Leesburg district where WorldCom is located. “I believe that Loudoun County is a great place to do business....I think we all are concerned about how businesses have been handling their accounting in the wake of these recent disclosures, but I am hopeful that WorldCom can resolve its problems.”
Last Sunday night, Sidgmore sent employees an e-mail apologizing for seeking federal bankruptcy protection.
“Like you, I’ve been through the range of emotions the last couple of months--shock, anger and embarrassment when we discovered the accounting problems ... and concern for you and your families,” Sidgmore wrote, according to an excerpt provided by a WorldCom employee. “I apologize for what has happened.”
But he said he would “commit to being here for the future” and asked employees to stick with him.
“Not everyone is pessimistic,” said a WorldCom employee. “I think the company can turn things around....We still have a lot of smart people and a lot of customers.”
