In 1983 in a small coffee shop in Hattiesburg, Mississippi, Mr. Ebbers first helped create the business concept that would become WorldCom and a Rival of AT&T. From its humble beginnings as an obscure long distance telephone company WorldCom, through the execution of an aggressive acquisition strategy, evolved into the second-largest long distance telephone company in the United States and one of the largest companies handling worldwide Internet data traffic. According to the WorldCom Web site, at its high point, the company giant achieved its position as a significant player in the telecommunications industry through the successful completion of 65 acquisitions. Between 1991 and 1997, WorldCom spent almost $60 billion in the acquisition of many of these companies and accumulated $41 billion in debt. Two of these acquisitions were particularly significant. [Colvin, G. (2002)]
The MFS Communications acquisition enabled WorldCom to obtain UUNet, a major supplier of Internet services to business, and MCI Communications gave WorldCom one of the largest providers of business and consumer telephone service. By 1997, WorldCom's stock had risen from pennies per share to over $60 a share. Through what appeared to be a prescient and successful business strategy at the height of the Internet boom, WorldCom became a darling of Wall Street. In the heady days of the technology bubble Wall Street took notice of WorldCom and its then visionary CEO, Bernie Ebbers. This was a company "on the move," and Wall Street investment banks, analysts and brokers began to discover WorldCom's value and make "strong buy recommendations" to investors. (Browning, E. S. 1997)
When this process began to unfold, the analysts' recommendations, coupled with the continued rise of the stock market, made WorldCom stock desirable, and the market's view of the stock was that it could only go up. As the stock value went up, it was easier for WorldCom to use stock as the vehicle to continue to purchase additional companies. The acquisition of MFS Communications and MCI Communications were, perhaps, the most significant in the long list of WorldCom acquisitions.
With the acquisition of MFS Communications and its UUNet unit, "WorldCom suddenly had an investment story to offer about the value of combining long distance, local service and data communications." In late 1997, British Telecommunications Corporation made a $19 billion bid for MCI. Very quickly, Ebbers made a counter offer of $30 billion in WorldCom stock. In addition, Ebbers agreed to assume $5 billion in MCI debt, making the deal $35 billion or 1.
Robert Zimmerman, the senior vice president of business development, for American Cable Communications (ACC) was in the process of looking for a potential acquisition target for ACC. In December 2007, Zimmerman remember a presentation that was made recently by Rubinstein & Ross (R&R). R&R was a boutique investment bank that was well known for doing deals in the media and telecommunications area. During this presentation it was suggested that ACC buy out AirThread Connections (AirThread) which is a large regional cellular provider. The current industry of these companies were moving more toward bundled service offerings and by adding AirThread it would help ACC cover an area of service it does not currently offer. In order to determine if the acquisition should be done an analysis needs to be done.
The company faces intense competition for the clients that it serves and the products and services it offers. There has been significant consolidation as financial institutions with which the company competes have been acquired by or merged into or acquired other firms. For instance, in November 2010, The Charles Schwab Corporation acquired Windward Investment Management, Inc. for $150 million in cash and stock. In June 2009, TD Ameritrade completed the acquisition of thinkorswim Group Inc. thinkorswim is among the fastest growing online brokerage firms and has unique trading and investor education capabilities, particularly for the fastest growing segment of the industry-options trading. So, this acquisition underscores TD AMERITRADE's position as a successful industry consolidator. Consolidation in discount brokerage industry is creating larger rivals to compete with.
Not only were millions of Americans been put out of work due to these manager’s actions, the American financial markets themselves were pushed to the brink of collapse. Despite the fact that the global financial markets, in reality, are not perfectly efficient, there is a corrective mechanism built into the day-to-day trading in the market. When prices are driven down by large sells, either by large investors or a movement in a stock, there are usually new buyers for these stocks at the cheaper price. Managers of...
MCI is at a critical point in their company history. After going public in 1972 they experienced several years of operating losses. Then in 1974 the FCC ordered MCI's largest competitor AT&T to supply interconnection to MCI and the rest of the long distance market. With a more even playing field the opportunities to increase market share and revenue were significant. In order to maximize this opportunity MCI required capital. Their poor financial performance required them to use less traditional instruments to obtain financing. The capital acquired supported their growth until they reached a level of profitability in 1978. Subsequently they continued to increase their net income and the quality of their balance sheet. With continued prospects for growth tempered with some regulatory uncertainty they need to determine their optimal financial structure for the future.
AT&T’s roots stretches all the way back to 1875, when Alexander Graham Bell created the first telephone. The main reason AT&T was created was to exploit the creation of the telephone. AT&T became a parent company to the Bell system, which was a phone company monopoly. They created a long distance telephone network that went from New York to Chicago and then on to San Francisco. Then in 1984 AT&T split into eight different phone companies. They built out to Denver in 1899 and then they hit a rough patch, the signal wasn’t too strong. Luckily, AT&T created the first practical electrical amplifier in 1913. And this made transcontinental communication possible. Bell’s patent expired in 1894 and only Bell telephone could only legally operate in the U.S. The number of telephones grew as phone wires spread across the nation, there where about 3,317,000 phones. The only downside to this early story is that, only phones with the same phone company could contact each other, this was being fixed in 1913. In 1925 there was a new president, Walter Gifford, he sold International Western Electrical Company to the ITT for 33 million to make AT&T universal. In January 1, 1984 was changed and revitalized, it no longer was the bell system. It had a new global icon, as you see today. IN 1984 AT&T carried around 37.5 million calls a day. CEO, Robert Allen, announced that on Septemb...
“Verizon Communications Inc., based in New York City and incorporated in Delaware, was formed on June 30, 2000, with the merger of Bell Atlantic Corp. and GTE Corp. Verizon began trading on the New York Stock Exchange (NYSE) under the VZ symbol on Monday, July 3, 2000.” Verizon Communications Inc. is a publicly held Corporation. In this paper, I will discuss the corporate roles and duties of a corporation. I will also discuss the differences between a publicly held and closed corporation.
Cisco is one of Americas greatest corporate success stories. Since shipping it’s first product in 1986, The company has grown into a global market leader that holds No.1 or No.2 market share in almost every market section in which it participates. Cisco went public in 1990 on the nasdaq stock market with annual revenues at $69 million in that year. But now their revenues are at $12.2 billion in fiscal 1999. Their revenues in the last four quarters are shown in the figure below.
Viacom formed when FCC rules had forced CBS to spin off some of its cable TV and program operations, this happened in 1971. Viacom then buys WAST-TV in 1979, in 1985 Blockbuster Video is founded, in 1981 the NAI buys majority interest ( Sumner Redstone owns this), in 1994 Viacom announces multi-transponder, multi-satellite agreement with PanAmSat. Also in 1994 Viacom and Paramount announces 8.4 billion dollar merger, Viacom then sells its 33% share of Lifetime. In 1995 Viacom spins off its cable systems for Tele-communications, in 1999 Viacom bought CBS for 50 billion dollars. There are other acquisitions and selling’s through which Viacom became so large, but I did not include every little thing.
In 1995, Electronic Data Systems, the US information technology services group, bought AT Kearney, the global strategy consultancy in a deal worth $596m. The acquisition of a hugely successful management consultancy by a global IT.
AT&T had developed a reputation for providing high-quality long distance telephone services. It moved rapidly to exploit this reputation in the newly competitive long distance market by aggressively marketing its services against MCI, Sprint, and other carriers. Also, AT&T had traditional strengths in research and development with its Bell Labs subsidiary. To exploit these strengths in its new global competitive context, AT&T shifted Bell Labs' mission from basic research to applied research, and then leveraged those skills by forming numerous joint ventures, acquiring NCR, and other actions. Through this process, AT&T has been able to use some of its historically important capabilities to try to position itself as a major actor in the global telecommunications and computing industry.
In 2004 Viacom decided to sell their controlling interest in Blockbuster. Unable to locate any interest they decided to spin off Blockbuster through a stock swap. Blockbuster would have to pay Viacom shareholders $5 per share resulting in nearly $1 billion in debt. At the time Blockbuster management thought they could quickly pay down the debt with their $500 million a year...
Background One. Tel was launched by Jodee Rich and Brad Keeling in 1995 (Cook, 2001). At first, it looked to get the advantages from deregulation of the telecommunication industry by reselling other network’s capacity and making money through stock market speculation. Rich and Keeling tried to increase the company’s shares rather than profit the company (Cook, 2001). Initially, One.
In an interview with James Wetherbe, Richard M. Schulze tells of how at eleven-years-old he became an entrepreneur in St. Paul, Minnesota as a paperboy. This newspaper boy would grow up to be founder of the world’s largest consumer electronics chain store, Best Buy Co. Inc. (Schulze, 2014). As an adult in 1966 Schulze partnered up with Gary Smoliak and opened the company called Sound of Music until 1986 (Bailey, 2015). Schulze bought out Smoliak around 1970 and by 1983 he had changed the name of the company to Best Buy Co., Inc. Four years later Best Buy Co., Inc. secures an entry on the New York Stock Exchange. During the early 1990’s Best Buy Co., Inc., had become the largest consumer electronics store in the United States.
WorldCom began as a small provider of long distance telephone service. During the 1990s, the firm made a series of acquisitions of other telecommunications firms that boosted its reported revenues from $154 million in 1990 to $39.2 billion in 2001 (Lyke and Jickling, 2002).
Michael Dell founded Dell Computer Corporation in 1984 with a simple vision and business concept – that personal computers can be built to order and sold directly to consumers. Michael believed his approach had two advantages: (i) by passing distributors and retail dealers eliminated the markups of resellers, and (ii) building to order greatly reduced the costs and risks associated with carrying large stocks of parts, components and finished goods. Its build-to-order and sell-direct approach proved appealing to growing numbers of customers in the mid 1990s as global PC sales rose to record level. In 1998, it was already the 3rd manufacturer in the United States with a 12% share of PC market and a nearly 6% share worldwide. The company’s fastest growing market for the past several quarters was Europe. Even during the Asia economic woes in the early 1998, Dell’s sales in Asia rose 35%. Its sales at the Internet Web site were about $5 million a day and expected to reach $1.5 billion annually by the year-end 1998. Since 1990, Dell’s stock price had exploded from 23 cents per share to $83 per share in May1998 with a 36,000% increase and was the top performing big company then.