Skip to main content
Select Source:

Bernie Ebbers

Bernie Ebbers

Through a series of increasingly audacious business acquisitions, Bernie Ebbers (born 1941) has built a once-small business into a global communications powerhouse. An enigmatic person, the laid back and private Ebbers has masterminded some of the largest, headline-grabbing takeovers in business history.

Technological innovations like cellular phones, fiber optics, and the Internet have led to a sea change in the telecommunications industry. As the battle among a handful of competing firms becomes more pitched, Bernie Ebbers has emerged as a force. In a series of acquisitions, Ebbers has built his original company, LLDS, into MCI WorldCom, the second largest telecommunications company in the world with 22 million customers and over $34 billion in revenue. And, Ebbers is not done yet. In October 1999, he announced a merger with Sprint Corp. that will create a company with revenues of $54 billion and 42 million customers.

Humble Roots

Born in Edmonton, Alberta, Canada in 1941, Bernie Ebbers comes from a working-class family. An intensely private man, little is known about his past. After high school, he got a job as a milkman, but tired of the drudgery and the 30-below-zero weather. It did not take him long to find something else to do.

Apparently, the 6-foot, 4-inch Ebbers played basketball in high school. He escaped the cold weather by accepting a basketball scholarship at Mississippi College, a tiny Southern Baptist school in Clinton, Mississippi. He graduated in 1967 with a bachelor's degree in physical education. Ebbers has lived in Mississippi ever since.

Although a bench-warmer on the team, the college had a profound effect on Ebbers' spirituality. In 1996, he wrote in the alumni magazine, "I came to have a fuller understanding of what my purpose was in life, what a personal relationship with Jesus Christ really meant, and how I would try to live my life from that point on." Crediting God for his success, Ebbers teaches Sunday school at his church.

After college, Ebbers held a number of jobs. He was a high school physical education teacher and basketball coach, then managed a garment warehouse. At one point, he was even a bouncer. Things began looking up in 1974, when he bought a motel in Colonel, Mississippi. After bringing in some investors, Ebbers was able to buy another in 1976. Eventually, he had a chain of nine Best Western motels. Although successful, the hotel business did not generate much cash.

Entered the Telecommunications Industry

When the federal government announced the forced divestiture of AT&T in 1982, many small companies leapt at the chance to enter the growing telecommunications industry. Ebbers had absolutely no experience in the long distance business, but jumped in on a small scale in 1983 when he and three friends borrowed $500,000 and bought a struggling phone company. With help from a waitress at their favorite coffee shop in Hattiesburg, Mississippi, they named it Long Distance Discount Service (LDDS). Initially, LDDS did not fare better under new management. The investors asked Ebbers to take over. He became CEO in 1985. Within six months, Ebbers had turned LDDS into a profitable venture.

In November 1983, LDDS was certified as a long distance carrier. Its first customer was the University of Southern Mississippi. Ebbers and the others were not willing to wait for growth. They embarked on an acquisition spree that followed Ebbers' philosophy of fast growth through acquisition. With each purchase, LDDS expanded operations from its small town base. The company went public in August 1989 through the purchase of Advantage Companies, Inc. This move allowed LDDS to provide long distance services to 11 Southern and Midwestern states.

Ebbers mapped a business strategy focused on providing corporations with a complete communications service. On the outside, it may have looked like Ebbers and LDDS were buying companies willy-nilly, but they acquired communications networks built with high-capacity fiber-optic cable and quickly expanded their service area. Each deal cut overhead of the combined company, thus saving money and increasing value.

In the early 1990s, Ebbers engineered the acquisition of several companies that would set the stage for the company's leap to national prominence. From 1992 to 1995, LDDS (renamed WorldCom in May 1995) bought corporations that expanded its service capabilities. Ebbers acquired Williams Telecommunications Group (WilTel) for $2.5 billion in 1995. The purchase brought into the WorldCom fold 10,000 miles of fiber and 1,000 miles of microwave transmission facilities. Now WorldCom could serve even the largest companies with both voice and advanced data communications systems. Two years later, the company could claim the position as fourth largest long-distance carrier.

A Global Leader

Ebbers grew WorldCom into one of the largest communications providers in the world, but he retained his small-town roots. A self-professed "country boy," he enjoys wearing faded blue jeans and cowboy boots over expensive suits and takes cabs when he could be riding in chauffeured limousines. He downplays his role in the company's success, although he is the driving force behind the acquisitions. Make no mistake, it is Ebbers' vision that drives WorldCom.

In 1996, Ebbers orchestrated the $12.5 billion purchase of MFS Communications that gave WorldCom a truly global network. A hidden gem in the deal was that it included UUNet Technologies, which MFS had previously acquired, a leading Internet services company. With these moves, the world began paying attention to Ebbers, who was building a worldwide communications network to serve his business customers.

The publicity surrounding the MFS deal did not change Ebbers. He still ran his company out of Jackson, Mississippi and listened to Willie Nelson songs, even though his piece of WorldCom was worth $560 million in 1997. Ebbers did, however, force Wall Street to stand up and take notice. Analysts backed his moves with enthusiasm, which helped him continue his spending spree, because he bought companies with a mix of stock transactions and cash. Wall Street's faith in Ebbers kept WorldCom's stock price high and increased the value of the companies he bought. Through most of the 1990s, WorldCom stock rose 50 percent annually.

The vibrant economy of the late 1990s led to a wave of mergers and acquisitions in industries worldwide. The telecommunications sector, formerly a regulated monopoly before being dismantled by the federal government in 1984, has undergone a period of consolidation that guarantees to leave only a few multinational corporations controlling the entire industry. The Internet and wireless communications have had a profound impact on the communications sector and forced companies to grow or be eaten alive by a competitor.

Ebbers and WorldCom orchestrated three multi-billion dollar deals in 1998. The largest of these was a proposed merger with MCI Communications in 1997 for approximately $40 billion, at the time the largest merger in business history. In fact, Ebbers' bid for MCI was a daring move and completely destroyed British Telecommunications' take-over bid of $18 million. The MCI bid shocked most observers in the business world. When the offer was made, MCI was four times the size of WorldCom. Many people wondered how the number four corporation could buy the number two. The move only enhanced Ebbers' public personae as a "Swashbuckling Dealmaker" who will move quickly to close deals. His record of more than 65 mergers and acquisitions since 1983 further add to his legend. Reportedly, he named his boat "Aqua-sition."

The two companies completed the merger a year later, forming MCI WorldCom. Size and prestige, however, were not the reasons Ebbers acquired MCI. WorldCom executives saw two distinct strategic values. First, the power and efficiency of the merged company would be greater than the two working independently. Second, the companies had corresponding strengths and assets. Ebbers predicted that the merger would cut more than $2.5 billion a year in combined costs.

Ebbers has built his corporation around servicing business customers. The MCI deal gave WorldCom control of 60 percent of all U.S. lines to the Internet, in essence, becoming the world's leading provider of Internet services. The company continues growing in size and scale to compete directly with industry leader, AT&T and the regional Baby Bells.

Country Boy Turned Business Magnate

In October 1999, Ebbers made another startling announcement: MCI WorldCom would purchase Sprint Corp. for a remarkable $129 billion. The merger will make WorldCom (as the new company will be named), only slightly smaller than industry leading AT&T. 1999 estimates predict that AT&T will reach nearly $62 billion in revenue, while the combined Sprint and MCI WorldCom would top $54 billion. WorldCom's market capitalization of more than $200 billion would outdistance AT&T's $133 billion.

Amusingly, Sprint CEO Bill Esrey was riding his horse in the middle of Colorado when he and Ebbers agreed to the deal. They reached an agreement via a wireless phone system that works via satellite. Also an outdoorsman, Ebbers is known to raise cattle and do his own chores on a ranch near WorldCom headquarters. In 1998, The Wall Street Journal reported that Ebbers bought a 164,000-acre ranch with 20,000 head of cattle 120 miles northeast of Vancouver, British Columbia.

Clearly, Ebbers expects to battle AT&T for the top spot well into the 21st century. The Sprint acquisition gives Ebbers an entry into wireless communications and a stronger base of residential customers. Ebbers' strategy is clear: his company will still cater to the business consumer, providing every available means of communication services, from voice to Internet access and wireless and international calling. Essentially, Ebbers will be able to offer this lucrative market a one-stop package fulfilling all a customer's needs.

As with the MCI merger, the Sprint deal allows Ebbers to offer a wider array of services and cut overhead costs dramatically. Operating cost savings are expected to hit $3 billion when the two are fully integrated. Especially attractive to Ebbers is Sprint's wireless/cellular business, Sprint PCS, which added more than two million customers in 1999 alone. WorldCom is also excited about gaining direct access to millions of residential customers. The company is developing technology that will give home users high-speed connections through fiber optic lines, permitting them to be connected to cable, phone, fax, and the Internet on one line.

There are a variety of risks associated with two mergers of this size, particularly integrating the corporate cultures of all three. There are also questions about merging technologies. For his part, Ebbers downplays the differences. With his record of accomplishment, it would be difficult to bet against him.

Over the years, Ebbers has been skilled in retaining the entrepreneurial spirit of the companies he's acquired and keeping employees happy. As WorldCom continues growing this task will become more challenging. He's already proving capable of the job with MCI. His low-key personality and frugal practices are permeating the company. Ebbers told Fortune's Nelson D. Schwartz, "I look at every single line item on the budget, it's an arduous process … they had their entourages and limos, but I always take a cab."

Ebbers is committed to increasing shareholder value, the CEO buzzword of the 1990s, thus the cost-cutting methods. In turn, he has been rewarded for his success. Ebbers made nearly $25 million in bonuses in 1997 and 1998. Forbes magazine estimates Ebbers' fortune at $1.4 billion, making him one of the 400 wealthiest Americans.

Although still intensely private after years in the public spotlight, Ebbers is now being considered one of the most important business leaders in the world. His prestige in the telecommunications industry grows daily. Ebbers has been a catalyst for change and other business leaders are imitating his strategies. In a sweeping indictment of Ebbers' prominence, long-time industry analyst Jeffrey Kagan told Fortune magazine, "Bernie Ebbers is the modern-day Theodore Vail."

Further Reading

Business Week, July 19, 1999; October 18, 1999.

Economist, September 13, 1997.

Forbes, July 6, 1998.

Fortune, August 2, 1999; February 1, 1999; December 8, 1997.

Kansas City Business Journal, October 8, 1999.

Newsweek, October 13, 1997.

Red Herring, May, 1999.

Time, October 13, 1997; September 22, 1997.

"About the Company," MCI WorldCom,http://www.wcom.com(November 1, 1999).

"Press Releases," MCI WorldCom,http://www.wcom.com(November 1, 1999). □

Cite this article
Pick a style below, and copy the text for your bibliography.

  • MLA
  • Chicago
  • APA

"Bernie Ebbers." Encyclopedia of World Biography. . Encyclopedia.com. 18 Dec. 2017 <http://www.encyclopedia.com>.

"Bernie Ebbers." Encyclopedia of World Biography. . Encyclopedia.com. (December 18, 2017). http://www.encyclopedia.com/history/encyclopedias-almanacs-transcripts-and-maps/bernie-ebbers

"Bernie Ebbers." Encyclopedia of World Biography. . Retrieved December 18, 2017 from Encyclopedia.com: http://www.encyclopedia.com/history/encyclopedias-almanacs-transcripts-and-maps/bernie-ebbers

Ebbers, Bernie

Bernie Ebbers (Bernard John Ebbers), 1941–, American business executive and white-collar criminal, b. Edmonton, Alta, grad. Mississippi College (1967). After running a small motel chain, he entered the telecommunications business when he and three friends purchased (1983) a small Mississippi phone company. With Ebbers as president, it made a series of acquisitions, went public (1989), and, renamed (1995) WorldCom, became a global communications giant. Ebbers pursued a policy of acquisition and cost cutting, and merged WorldCom with MCI in 1998. As stock prices rose in the 1990s, Ebbers became worth well over $1 billion.

When WorldCom's stock declined in 2000, the company made massive loans to Ebbers to keep him from selling stock and further depressing its price. A Securities and Exchange Commission investigation into the loans led in 2002 to Ebbers' resignation, and WorldCom admitted that it had inflated earnings by $3.8 billion. Subsequent probes uncovered some $11 billion in fraudulent accounting practices that had fueled WorldCom's rise (and hurt other telecommunications companies by creating the impression that they were much less efficiently run). WorldCom was forced into bankruptcy, and investors lost $180 billion. Convicted in 2005 of securities fraud, conspiracy, and filing false reports, Ebbers was sentenced to 25 years in prison.

Cite this article
Pick a style below, and copy the text for your bibliography.

  • MLA
  • Chicago
  • APA

"Ebbers, Bernie." The Columbia Encyclopedia, 6th ed.. . Encyclopedia.com. 18 Dec. 2017 <http://www.encyclopedia.com>.

"Ebbers, Bernie." The Columbia Encyclopedia, 6th ed.. . Encyclopedia.com. (December 18, 2017). http://www.encyclopedia.com/reference/encyclopedias-almanacs-transcripts-and-maps/ebbers-bernie

"Ebbers, Bernie." The Columbia Encyclopedia, 6th ed.. . Retrieved December 18, 2017 from Encyclopedia.com: http://www.encyclopedia.com/reference/encyclopedias-almanacs-transcripts-and-maps/ebbers-bernie