Disconnected

Lynne W. Jeter was the Mississippi Business Journal's main WorldCom reporter and had followed the company for years, and her book reflects that vantage. Her subject is the long-distance giant that filed for Chapter 11 in July 2002 after internal auditors found billions of dollars in operating costs booked as capital assets. She concentrates on the personalities: Bernie Ebbers, the former basketball coach and motel owner who bought his way to the top of the industry, the executives charged with fraud and those who walked away unscathed, and the religious, political and social setting of a company run from Clinton, Mississippi. Booklist singled out her behind-the-scenes look at the players and the scandal's effect on the state.

The book was published in March 2003, months after the bankruptcy, so it predates Ebbers's 2005 conviction and 25-year sentence and the later finding that assets had been overstated by about $11 billion. Readers who want the forensic detail should add Cynthia Cooper's whistleblower memoir, Extraordinary Circumstances. As a portrait of acquisition-fueled growth and a culture that discouraged hard questions, it is still useful to analysts and auditors.

1. Acquisition-driven growth has an end date. WorldCom grew by buying other carriers. When the Sprint merger failed in 2000, the growth stopped, and the pressure to keep reported numbers rising grew.
2. Capitalizing expenses is a classic red flag. Booking billions of dollars of operating costs as assets lifted reported earnings. Analysts should question capital spending that rises without matching revenue.
3. Culture is a control. An insular, personality-driven company far from Wall Street's scrutiny let questionable accounting go unchallenged for too long.
4. Watch the human signals. Jeter's stories of employees reassured over lunch with the boss and then locked out of their offices show how a company treats its people, which can say as much as its filings.
5. Internal audit matters. The fraud was uncovered by WorldCom's own internal auditors, not by its outside accounting firm or Wall Street analysts.

Jeter tells the story chronologically, opening with a timeline of the key events.

1. The LDDS years. A group of Mississippi investors starts a long-distance reseller in 1983, and Bernie Ebbers, a motel owner and former coach, takes charge and builds it through a string of acquisitions.
2. Becoming WorldCom. Deal after deal turns the regional reseller into a national carrier and one of the world's largest internet backbones, while Ebbers keeps an informal, personal style of running the company from Mississippi.
3. The Sprint courtship. WorldCom's failed bid to merge with Sprint in 2000 exposes strains in the business and, in Jeter's telling, foreshadows the collapse.
4. The revelation. In June 2002 the company discloses that billions of dollars in expenses had been improperly recorded, its chief financial officer is fired, and executives face investigation.
5. Bankruptcy and fallout. WorldCom files the largest bankruptcy in US history, and Jeter traces the damage to employees, investors and Mississippi, and who was held responsible.

Disconnected is the first book to tell the tale of the once powerful telecom pioneer whose corporate scandal eclipses the Enron fiasco. During the summer of 2002, WorldCom, once a leading carrier of Internet traffic, filed the largest bankruptcy claim in American history due to accounting errors totaling over $7 billion-and now finds itself on the brink of corporate extinction. Disconnected offers an engaging account of what really went wrong at WorldCom and why no one saw this corporate collapse coming. Author and award-winning journalist Lynn Jeter has been covering WorldCom since 1984 and provides a one-of-a-kind look into the inner workings of this global telecom giant. Readers will take a front row seat as Jeter explores the personalities and factors that led to WorldCom's rise and dramatic fall-such as the failed Sprint merger in 2000 and the revelation in June 2002 of their overstatement in earnings. Digging deep to uncover the mistakes, missteps, and outright unethical behavior that engulfed WorldCom, Disconnected also takes a closer look at former CEO Bernie Ebbers who was on the frontline during the years leading up to this corporate debacle. Disconnected: Deceit and Betrayal at WorldCom gives readers the most telling account of a one-time industry giant. Lynne W. Jeter (Hattiesburg, MS) has been the primary WorldCom reporter for the only statewide business journal in Mississippi (home of WorldCom headquarters), The Mississippi Business Journal. Jeter has closely followed the company's rise and fall since its inception as LDDS in 1983. As a native Mississippian, Jeter has a solid knowledge of the unique business climate of the Deep South and access to a wealth of information and contacts that no other reporter could possess on this topic.