WorldCom CEO Outlines Turnaround PlanWorldCom CEO Outlines Turnaround Plan

CLINTON, Miss. (AP)--WorldCom Inc. chairman and CEO Michael D. Capellas, in a speech some analysts described as a pep rally, told employees Tuesday that the bankrupt phone carrier will file a reorganization plan by April 15.

In an hour-long broadcast to the telecom giant's 60,000 employees, Capellas outlined a 100-day plan for WorldCom to emerge from the largest-ever U.S. bankruptcy and from the $9 billion accounting scandal that almost destroyed it.

He also told workers to expect that some employees would be fired as the result of ongoing internal investigations into the company's massive accounting fraud.

"Bad things have happened to us," said Capellas, who spoke from a WorldCom sales office in Orlando, Fla. "I know it will be tough. But we have the will to win."

Capellas promised that WorldCom--which filed for bankruptcy in July and is still being investigated by the Justice Department and Securities and Exchange Commission--would act with "an outrageous sense of urgency."

The address was short on specifics, but Capellas promised to deliver a detailed three-year business plan March 1.

"Today was his coming out party," said Jeff Kagan, an independent telecommunications analyst. "It wasn't about specifics."

Some analysts expect WorldCom will try to shed its negative image by assuming the name of its long-distance unit, MCI. Several noted, however, that Capellas' reshuffling of executive assignments announced Tuesday favors executives from WorldCom's MCI Group.

Analysts also noted that Capellas--who led Compaq Computer Corp. through a restructuring and a merger with Hewlett-Packard Co.--is taking a page from his computer background in his turnaround strategy for WorldCom.

They cited his vow to target the small- to medium-sized business market and assign his top executives to shadow a select group of top business accounts. All these were tactics he employed at Compaq.

"His strategy is tainted with his prior background and that's good," said Frank Dzubeck, president of Communications Network Architects. "He understands how companies in the computer industry have reorganized to be competitive and now he's doing it with a 500-pound gorilla."

Capellas didn't address the accounting scandals and strategic missteps that led to the ouster of former WorldCom CEO Bernard Ebbers and conviction of four former executives. But he indicated an internal investigation has uncovered evidence some employees still at WorldCom may have been involved in accounting abuses.

"There will be some people who are leaving the organization as a result of some of these reports," Capellas said.

Industry observers expect Capellas will eventually bring in his own management team, but they said they thought that WorldCom had already fired those connected with the scandal.

"I would think at this point they would already have cleaned house," said Rick Tilton, CEO of turnaround firm Greenacre Asset Advisers.

Capellas also said Tuesday that WorldCom will launch a series of new products and may take on business partners to market them.

He also announced initiatives to boost employee morale, including absorbing health care cost increases and easing business travel restrictions. Employee morale has been devastated: The company laid off 20,000 workers last year, and the collapse of its stock cost investors, including employees, more than $7.5 billion.