A friend of mine was on the phone the other night, and she thinks that this is the time to be buying WorldCom stock. I allowed as how it was probably cheap enough (last time I heard it was something like 11 cents a share), but why would you want to?

She said that one of World Com's biggest clients is the US Government, and her rationale was that the stock is going to be worth it -- after all, do you think that the government is going to let them just go under?

It makes me wonder. It also makes me wonder if maybe I shouldn't sink $50 into it and see if it turns into a some-day retirement fund...except that I haven't got the foggiest notion how one goes about buying stocks!

-- Anonymous, July 19, 2002

Answers

I've thot excatly the same thing. $110 buys 1000 shares. $1100 buys 10,000 shares.

From what I understand their monthly cash flow is something like $200,000,000 so with annual revenues of 2.4 billion annually the 4 billion $ screw up doesn't seem so bad.

-- Anonymous, July 19, 2002

That's how we buy stocks, Julie. We never pay more than $2.00 a share and usually it's less than a buck!! Then we sell when we've made at least 30%. We're not getting rich, but we keep any profit money in our online account where the interest is better than a savings acct. We use Datek and have been happy with them! I think we'll look into WorldCom. I didn't know it was so cheap now and like you said, probably the govt. wont let them go under!!

-- Anonymous, July 20, 2002

We bought $700 worth of Enron stock back in December when it was below $1 a share and it's pretty worthless right now, and I had to battle my husband into not buying a whole lot more. But maybe it will be worth something someday.

Namaste, Judy

-- Anonymous, July 20, 2002

Umm...well, we have about 500 shares we'd be glad to sell you..... (cough). Actually they're tied up in Mr. S's 401k. I hope you're right. I dunno. If W let Kenny Boy (Enron) go under in even more favorable times, I think WorldCOM might just be a goner. I'm using up my pre-paid phone minutes calling every relative I've ever known!

Good luck to all of us suckers as we watch our stock equity flush away. (Good news if you hold precious metals, I guess, though).

Time to plant fall crops now. That's something you can sink your teeth into!

-- Anonymous, July 20, 2002

Well I think Humpty Dumpty is going to fall off of the wall, and all the kings horses and all the kings men won't be able to put him back together again. Forget stock, the material world is going down the drain. Now Sheepish, your talken, the garden. My investment in my future is my garlic!

Yeah, Crazy ole Trennie

-- Anonymous, July 20, 2002

Jules, save your hard earned dollars and keep 'em safe, like in a regular bank account or bank money market account, at least the paltry interest earned is a positive amount!!! Geez, it makes me really sick to watch our Janus Mutual Fund accounts eat up our hard earned investment money every quarter, was supposed to be our "retirement" money! Half of it is gone, and I am betting the land we own will have to be our retirement money.

Real estate is still the safest bet in investing, no one making any more of it, you know, and rural property (especially around here) is tripling and quadruplying the original investment in less than 10 years.

-- Anonymous, July 21, 2002

You can't buy into it or sell out if they're going into bancruptcy.

-- Anonymous, July 21, 2002

From the NY Times, for discussion purposes:

July 22, 2002 Bankruptcy at WorldCom Is the Largest in U.S. History By SIMON ROMERO and RIVA D. ATLAS

WorldCom, plagued by the rapid erosion of its profits and an accounting scandal that created billions in illusory earnings, last night submitted the largest bankruptcy filing in United States history.

The bankruptcy is expected to shake an already wobbling telecommunications industry, but is unlikely to have an immediate impact on customers, including the 20 million users of its MCI long- distance service.

The WorldCom filing listed more than $107 billion in assets, far surpassing those of Enron, which filed for bankruptcy last December. The WorldCom filing had been anticipated since the company disclosed in late June that it had improperly accounted for more than $3.8 billion of expenses.

Few experts or officials expect WorldCom's service to deteriorate noticeably, at least in the near term. "I want to assure the public that we do not believe this bankruptcy filing will lead to an immediate disruption of service to consumers," Michael K. Powell, chairman of the Federal Communciations Commission, said last night.

But industry consultants said they could not imagine how the belt- tightening expected in bankruptcy would improve service that is already, in some respects, sloppy.

WorldCom's collapse has already reverberated through jittery financial markets, and is likely to be felt in the wider economy, with banks, suppliers and other telephone companies devising strategies to contain their exposure.

WorldCom, built through rapid acquisitions, accumulated $41 billion in debts. Founded in 1983 as LDDS Communications, it became the nation's second-largest long-distance company and the largest handler of Internet data.

Company executives said they intended to remain in business, and have been promised new financing from banks to do so. "We are going to aggressively go forward and restructure our operations," John W. Sidgmore, WorldCom's chief executive, said in an interview last night. "I think ultimately we will emerge as a stronger company."

While WorldCom has already cut its work force significantly, Mr. Sidgmore said last night that he did not expect further layoffs for the time being. He said he would remain WorldCom's chief but would be joined by a chief restructuring officer brought in by creditors.

Some creditors, however, have questioned whether Mr. Sidgmore, who has served on WorldCom's board for years, should remain in charge. Mr. Sidgmore took over as chief executive in late April after the board ousted Bernard J. Ebbers, one of the company's founders.

Shareholders, who owned what was once one of the world's most valuable companies, worth more than $100 billion at its peak, are expected to be virtually wiped out. With the bankruptcy filing, control passes instead to the banks and bondholders who financed WorldCom's growth.

Besides its own overambitious strategies and flawed accounting, WorldCom also fell victim to a glut of telecommunications capacity.

Cheap and plentiful financing allowed companies rapidly to build transcontinental and transoceanic fiber optic networks in the 1990's. The additional capacity resulted in lower prices for WorldCom's services, which include basic phone service and the transmission of Internet data for large companies.

Mr. Sidgmore said last night that he was opposed to breaking up WorldCom and selling its pieces, aside from an effort already under way to part with peripheral units like businesses in Latin America and some other operations. This approach would rule out selling UUNet, a large Internet backbone operation, or MCI.

But once the company reorganizes, and investors gain a better understanding of its twisted finances, WorldCom could become an attractive acquisition target, analysts say.

WorldCom's crisis deepened last month when it disclosed that Scott D. Sullivan, the chief financial officer, had devised a strategy that improperly accounted for $3.85 billion of expenses. Mr. Sullivan was fired by the board and David F. Myers, the financial controller, resigned.

The Securities and Exchange Commission has charged WorldCom with fraud and the Justice Department has begun a criminal investigation of its business practices.

In an attempt to regain its credibility, WorldCom's board elected two new members to replace Mr. Sullivan and Mr. Ebbers: Nicholas deB. Katzenbach, a private attorney who was attorney general in the Johnson administration; and Dennis R. Beresford, a former head of the Financial Accounting Standards Board and a professor of accounting at the Terry College of Business at the University of Georgia.

The two were also appointed to a special committee to oversee the internal investigation being led by William R. McLucas, the former chief of the enforcement division of the S.E.C.

WorldCom filed for bankruptcy shortly before 9 last night in Federal District Court in Manhattan.

Its international operations, which include companies in Brazil and Mexico, were not included.

The filing will relieve WorldCom of about $2 billion of interest payments in the coming year. Lower debt costs could allow WorldCom to compete on a stronger footing with its rivals, involving a potential price-cutting strategy that has analysts concerned about the wider strength of the telecommunications industry.

"WorldCom probably won't get any new big contracts from its current customers, but it probably won't lose any either, because of the difficulty and complexity involved in switching carriers," said Glen Macdonald, a vice president with Adventis, a consulting firm in Boston.

WorldCom, based in Clinton, Miss., scrambled in recent days to secure new financing from its banks after its cash dwindled to less than $300 million from more than $2 billion in May. WorldCom said last night that it had received commitments for up to $2 billion in additional bank financing. Such new loans to companies in bankruptcy receive top priority in repayment.

WorldCom must now deal with holders of $28 billion in bonds as well as 27 banks that loaned the company $2.65 billion last May.

But in contrast with other companies that have recently filed for bankruptcy, including Enron, WorldCom has many more tangible assets, generating actual revenues, lawyers said — improving the odds that the company could emerge from bankruptcy as a going concern.

The creditors first in line to be repaid will be the three institutions — Citigroup, J. P. Morgan and General Electric Capital — that have pledged to arrange a loan of up to $2 billion, known as debtor in possession financing, to WorldCom. The lenders were comfortable pledging the funds in part because of the company's stream of customer payments, such as phone bills, one executive close to the company said last week. Citigroup is leading the new financing in part to protect what it is already owed by WorldCom.

WorldCom's bankruptcy filing, like Enron's last December, came on a Sunday. Companies often prefer to file over the weekend, because the status of any business transactions in process at the time of a filing would be open to question in court.

WorldCom's lenders and its bondholders were taking steps, even before the bankruptcy filing, to protect their claims. Just over a week ago, the banks that participated in the earlier $2.65 billion loan tried, unsuccessfully, to get a court order limiting WorldCom's access to the loan. The banks ultimately reached a settlement with WorldCom that placed few restrictions on the company's ability to use the cash.

-- Anonymous, July 22, 2002

My honey and her broker sister in law convinced me to "diversify" a few years ago, because I had put virtually everything into real estate, including my energy, by building rentals.

The IRAs, the TSAs, the Mutual Funds: all have lost money, some of them a lot of money. I did break even on a "chicken stock" which was guaranteed to at least break even. It broke even. hoohah!

My real estate, meanwhile, has appreciated somewhere between 50 and 100 percent, not to mention I make more on the rent than I ever made working (not that I ever made much working, though)

To play devil's advocate, though, my brother in law, and also his mom, both lost big time on real estate down in Southern CAlif. a few years ago, when the "bottom fell out of the market".

Basically, the real estate "values" had been bid up to totally unrealistic heights for many years, and when the economy slowed down, the real estate market crashed.

Who knows, my real estate could crash too. On the other hand, like Annie said, they're not making it anymore (except in Hawaii, of course)

Now, with the mutual funds WAY down, honey's sis in law is still counselling us to hang in there, since this stuff is supposed to be for retirement (four years from now for my hon). Since we're buying more every month, we're getting more stocks for the buck, and assuming the stocks come back up within the next four years, we'll actually be better off for this stock market dive.

Wish I had my crystal ball working :(

-- Anonymous, July 22, 2002