Capellas outlines WorldCom's next 100 days

WorldCom Inc. must approach the pivotal next 100 days with "an outrageous, outrageous sense of urgency" focused on rolling out new products and forging alliances at the same time that it reorganizes and puts into place a plan to emerge from bankruptcy, Chairman and Chief Executive Officer Michael Capellas told employees Tuesday.

"Bad things have happened to us," Capellas said in an upbeat speech, which was webcast and carried via conference call. "Some segments of the organization have been decimated." Those areas will be rebuilt and the entire company has to focus on rebuilding and working as a team, acknowledging the difficult past but now looking more to the future.

"We've got to hold hands and sing 'Kumbaya, My Lord,' together," Capellas said, referring to a popular church camp song.

Starting this week the company will announce new products, a new international rate structure and an extension of U.S. local service, and will soon announce a major initiative aimed at small and medium-size businesses, he said.

The company's cost-structure plan will be finished by Feb. 1 and the compensation plan will be ready by Feb. 15, he said, with a three-year business plan filed March 1. That plan will be rolled into the reorganization plan that will take the company out of the largest bankruptcy in U.S. history, he said. Major cost reductions will be part of that plan, Capellas said.

Capellas, who had been president of Hewlett-Packard Co., took over in November at WorldCom, which filed for Chapter 11 bankruptcy protection in July of last year after a US$9 billion accounting scandal was revealed and top executives were indicted on federal charges.

The company must capitalize on the strength of its infrastructure and work on products that allow customization of networks, as well as on content distribution, wireless/mobile service, data centers and voice portals, he said.

"The future of networking is the future of computing," Capellas said, urging that the company return to basics and its core strengths, emphasizing sales and new products.

"Our foundation was built on creative new products," he said. "It is our foundation. It is our heritage."

WorldCom will have a "major" launch this quarter, Capellas said after demonstrating a tool that allows an assortment of devices, including traditional wireline telephones, mobile phones and PCs to be placed at various points on the IP (Internet Protocol) backbone to tie them together so that users can set up how they want to receive voice messages. A message can first be sent to a home phone, then to a mobile phone, then to a PC, with a specific number of rings allowed at each phone and if the user doesn't answer the message is sent to the next device.

WorldCom also needs to focus on developing the local footprint and expanding into developing countries, he said.

All of the new initiatives and product launches will happen as WorldCom develops stronger partnerships, Capellas said, adding that work already is going on in that area.

Prospective customers should also expect some mail from WorldCom, with a direct mail campaign planned, he said. The company also is starting a customer advocacy program and has formed a group of executives who will "sponsor" WorldCom's top customers who will have direct input to top management.

A guaranteed two-hour response time has begun when customers report a problem, and WorldCom also will allow online problem reporting.

A new leadership structure is key to the 100-day plan and beyond that, Capellas announced some management appointments:

-- Cindy Andreotti, president of business markets;-- Seth Blumenfeld, president of WorldCom International to oversee all three international regions for the company;-- Fred Briggs, president of operations and technology;-- Daniel Casaccia, executive vice president of human resources;-- Victoria Harker, acting chief financial officer;-- Wayne Huyard, president of MCI Mass Markets;-- Michael Salsbury, executive vice president and general counsel;-- Grace Chen Trent, chief of staff.

Although Capellas' speech concentrated more on the future, he made numerous references to the scandal and fallout.

"On a serious note, I know we need to rebuild trust." The company has created an ethics office and is taking a "zero tolerance" approach to ethics. As a result, he said, "some people will be leaving the company."

WorldCom has to show customers that the company can be trusted. "It's going to be tough, but in a hundred days we will rebuild our future," Capellas said. "In a hundred days we will celebrate."

The speech, though somewhat short on specifics, drew praise from veteran independent telecom analyst Jeff Kagan, who called it "WorldCom's State of the Union address." There was "never a doubt about the integrity and character of Capellas," but the talk shows that he understands the "seemingly immense issues, challenges and opportunities," Kagan wrote in an e-mail commentary after the speech.

"During his extended presentation Capellas was all over the map painting a painfully accurate picture of WorldCom's strengths, weaknesses and challenges," wrote Kagan, who said, "I feel much better about the prospects for WorldCom's future than I have for a long time."

Capellas' remarks are meant to create a framework for WorldCom "that the entire organization can buy into in order to get the healing and rebuilding process under way," Kagan wrote. "The one clear goal of having a plan to emerge from bankruptcy after the first 100 days is aggressive, but shows he is serious and is a survivor."

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