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 it reorganizes and puts into place a plan to emerge from bankruptcy, Chairman and CEO 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, he said, 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 it will soon announce a major initiative aimed at small- and medium-sized 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. WorldCom filed for Chapter 11 bankruptcy protection last July after a US$9 billion accounting scandal emerged 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 centere and voice portals, he said.

“The future of networking is the future of computing,” Capellas said, urging the company to 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 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. 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, Capellas said.

All of the new initiatives and product launches will happen as WorldCom develops stronger partnerships, he 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, which will have direct input to top management.

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

A new leadership structure is key to the 100-day plan, and Capellas announced a variety of management appointments during his speech.

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,” he said. 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.”

Jeff Kagan, a telecommunications industry analyst, called Capellas’ speech his “coming-out party.”

“I give him high marks,” Kagan said. “There was never a doubt about the integrity and character of Capellas, but for anyone who wondered whether he could get his arms around WorldCom’s seemingly immense issues, challenges and opportunities, I think today’s presentation left them feeling much better…about WorldCom’s chances.

“This was a chance to get everyone on the same page and everyone’s efforts in the same direction,” Kagan said. “WorldCom has been understandably distracted over the last year, and this was the first tangible evidence that the worst might be over and the long road of healing and rebuilding can begin.”

But, he said, “It’s not going to be easy.”

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