Subject: [NEXTEL-1] Fifth Annual Businessperson of the Year-John Sidgmore

From: Marcel <[email-masked]>
Date: Thu, 02 Jan 2003 16:25:19 -0500

From the December 27, 2002 print edition

Fifth Annual Businessperson of the Year

John Sidgmore

He voluntarily stepped into the toughest job in American business, and ended the year with
his reputation intact

John Wilen   Staff Reporter

Can you imagine a tougher job than taking the helm of a company in the midst of one of the
biggest corporate scandals in U.S.
history?

You'd have to ask yourself, what kind of fool would do such a thing?

Enter John Sidgmore, who's no fool, by the way.

When he took over as CEO of WorldCom, he did so with his eyes wide open and his reputation
at stake. For months, he
shepherded the embattled telecom giant through the worst news events imaginable — first
that $3.9 billion in WorldCom revenue
was in question; then the discovery that the correct amount of accounting irregularities
was actually $9 billion.

Through it all, Sidgmore maintained a steady hand and steady voice, promising to do his
best to get the company back on track.

By year-end, he turned over his CEO job to a hand-picked successor and resigned from
WorldCom's board of directors. But
don't count him out just yet. He plans to stay involved in company matters while the
telecom tries to achieve its giant status once
again.

John Sidgmore is a U2 fan.

A really big U2 fan.

A buy-a-guitar-signed-by-the-band kind of U2 fan.

The approach to his Vienna office is a gauntlet of paraphernalia from the Irish musical
group: Posters, autographed album covers,
photos.

The signed guitar hangs on the wall above Sidgmore's desk, next to his 1970 Jimi Hendrix
concert poster. Don't, however,
confuse it with the computerized guitar that is also mounted above his desk.

"This is a much better guitar," Sidgmore says of the U2 ax.

Far more than a rock fan, Sidgmore in many ways exemplifies the tech boom and the telecom
bust of the late '90s and early '00s,
and the dramatic way technology has changed over the past several decades.

His first jobs involved selling both programmable calculators and computing time on
mainframes.

He built UUNet into the biggest Internet backbone in the world. Many credit him with
commercializing the Internet. He is CEO
and owner of an e-commerce software firm, and involved in many other small companies.

"Unfortunately, I've been an investor in a lot of these," he says, with a laugh.

And he presided over the bankruptcy of WorldCom, a company that for many personifies
"irrational exuberance" and the ills of
corporate indulgence.

But as you enter Sidgmore's office, all of that is quickly pushed from your mind by
visions of … well, U2.

"I just saw them this last year, and they were great," Sidgmore says. "I saw them a couple
years ago in Chicago, during the 'Pop'
tour. … I don't know if you noticed, but everything in here is U2 stuff, pretty much."

It's kind of hard not to notice.

(It's a) Beautiful Day

The year was 1989. John Sidgmore had spent the past five years working for GE Information
Services in Rockville, where he
rose to general manager of North America.

The owner of Intelicom Solutions, a small private telecom firm, offered Sidgmore his first
big break.

"The company was really in a downtrend, and he wanted me to rebuild it and then sell it,"
Sidgmore recalls.

Sidgmore thrived in the role of turnaround specialist — he boosted Intelicom from $20
million to $150 million in annual revenue
by the time he sold it to Computer Sciences Corp. in 1992.

Sidgmore headed CSC Intelicom's technology and communications practice for two years,
until another turnaround opportunity
presented itself. A friend who was consulting with UUNet called and said: "'This crazy
little company is really fun, and you ought
to consider coming here,'" Sidgmore recalls.

He balked. UUNet was an Internet company, and in 1994, the Internet was still seen as the
equivalent of ham radio — something
for hobbyists and geeks, not legitimate businesses.

"I knew that there was something called the Internet, that it was kind of this mystical
fabric of networking," Sidgmore says. "I said
no, because … at CSC, I was actually running a pretty large company."

Another friend intervened: "He called and said, 'This could be a gigantic new industry,'"
Sidgmore recalls.

Then Sidgmore got to know UUNet founder Rick Adams — "the smartest person I've ever met."

Sidgmore was smitten with UUNet's entrepreneurial environment, its "beard-and-sandals"
engineers. But he was still wary. The
Internet was unproven. UUNet had only 30 employees. Adams, despite his technical genius,
"didn't have a single salesperson in
the company, … because he didn't, quote, 'Want us to be lying to customers,'" Sidgmore
says with a laugh.

But Sidgmore overcame his reluctance.

"I really thought the thing had enormous potential," Sidgmore says. "And I told my wife
then, this is either going to be the next
greatest thing, or it's going to be a disaster and we'll be looking for a job in another
six months. But it was just so exciting. … It
was just too good to pass up."

The world was about to change.

Stranger in a strange land

Sidgmore wasn't new to the "next new thing." He'd entered new industries cold before.

He grew up in suburban Rockland County, 20 minutes north of New York City. Due to his
father's infirmity — "he went blind in
1968 or '67" — Sidgmore attended the State University of New York instead of "some real
college."

Sidgmore's first two jobs out of school involved selling calculators, "the big, hot thing
at the time." Both companies folded, and
Sidgmore went to GE, where he started out selling time-sharing on mainframe computers.

But nothing prepared him for the wild ride ahead.

Where the streets have no name

Sidgmore's first challenge at UUNet was to figure out what the company was going to do.

"The board really wanted us to go into the consumer end of the Internet, like AOL,"
Sidgmore says.

But Sidgmore had a hunch that the business side was the place to be. He sold UUNet's board
on his hunch, then went
customer-hunting.

"I went to [AOL chief] Steve Case and to Microsoft, and I said, 'Look, I'm going to build
this huge business network, and
basically businesses will use it during the day," Sidgmore says. "We'll charge you a very
small rate for using it at night for your
consumer customers.'"

Both AOL and Microsoft "bought into that concept, and that was really the thing that made
the company," Sidgmore says.

"He's one of the first guys to recognize the commercial potential of the Internet," says
Max Smetannikov, a telecom analyst at
Sterling-based Current Analysis (http://www.currentanalysis.com).

"He was in the eye of the storm before the Internet was a household name," says Jeff Kagan
(http://www.jeffkagan.com), an
independent telecom analyst based in Marietta, Ga.

UUNet was the right company in the right place at the right time. Growth was phenomenal:
The company raised $68 million in a
1995 IPO. It snapped up European companies and, "by the end of '95 we were by far the
largest … Internet network in the
world."

By early 1996, others were starting to wake up to the Internet's full potential. Giants
like AT&T and IBM announced big online
initiatives. For UUNet to compete, it needed capital. Sidgmore sold the company to MFS
Communications. Later that year,
WorldCom acquired MFS.

After that deal, Sidgmore became WorldCom's chief operating officer and heir apparent to
Bernie Ebbers' CEO throne.

He had hit the big time.

Under a Blood Red Sky

"We had a plan to really grow the hell out of the business through acquisition," Sidgmore
says of his early years at WorldCom
(http://www.worldcom.com).

But amid WorldCom's acquisition spree, Sidgmore looked around and saw himself on track to
succeed Ebbers as head of a
massive firm with 68,000 employees.

"Managing gigantic companies, it was really not my desire in life to do that," Sidgmore
says.

In 1998, Sidgmore told Ebbers about his misgivings. He took himself off the CEO track and
remained involved only strategically.

In 1999, he negotiated mergers with Sprint and Nextel. Regulators nixed the first. On
Nextel, Sidgmore ran into opposition from a different quarter.

"There was a very famous argument, or fight, between me and Bernie Ebbers," Sidgmore says.
"We really shook hands on the
deal, with Craig McCaw, and the deal should have been done, but Bernie decided at the last
second that he didn't want to do it, after he had already agreed on it. … In retrospect
that was probably the worst thing that ever happened to the company."

That fight confirmed Sidgmore's desire to end day-to-day involvement in WorldCom.

"That made me less interested, for sure," Sidgmore says. "That was the end of it for me,
pretty much."

In 2000 and 2001, Sidgmore did "almost nothing, other than make speeches for the company."
His WorldCom management days
were over. Or so he thought.

Sunday Bloody Sunday

It's Sunday, June 23, 2002. Tomorrow, WorldCom will drop a bomb that will rock markets
worldwide. The year has been
turbulent. Sidgmore was made CEO after Ebbers resigned in April amid questions about a
personal loan Ebbers received from
the company and investigations of WorldCom's accounting practices.

When he succeeded Ebbers, WorldCom looked to Sidgmore like a company that simply needed to
get out from under $30 billion
in debt — a burden that cost $2 billion in annual interest payments. When he stepped up to
the CEO job, Sidgmore arrived with a
plan.

"My concept was, if I can take $2 billion a year of costs out of the business and show
that to Wall Street, then this whole issue
with interest payments would go away," Sidgmore says.

He immediately cut 17,000 jobs and arranged for a $5 billion loan. Then WorldCom's audit
committee asked Sidgmore to attend
its next meeting.

"The fact that they were bringing me to the audit committee was a bad sign," Sidgmore
says.

CFO Scott Sullivan also attended the meeting. He refuted the committee's findings that
WorldCom's P&L was filled with $3.9
billion in fraudulent accounting. Sullivan, in fact, wrote a position paper defending the
accounting. The company didn't buy it.

"Once that happened," Sidgmore says, "I knew it was a disaster."

Indeed, WorldCom's admission of $3.9 billion in fraudulent accounting made the months-old
Enron debacle pale in comparison.

That number later climbed to $9 billion.

Stuck in a moment you can't get out of

"June 24, we announced the fraud, and the second that was announced, I mean, the world
just ran away," Sidgmore says. "I
mean, banks ran away, they clamped down on our lock-boxes, we couldn't collect any cash,
and we had no way of paying our
bills. … We had no choice but to go into Chapter 11."

"It broke my heart," Sidgmore says. "I mean, I couldn't even believe that guys that I knew
could participate in this."

Who's responsible? Sidgmore says he believes Sullivan is "ultimately responsible."

"He's the CFO," Sidgmore says.

Sidgmore is widely seen as an innocent bystander to the WorldCom train wreck.

"This totally took him by surprise," says Kagan. "He just was out of the loop."

"When I took over in April, … I had absolutely no idea there were any accounting issues,"
Sidgmore says.

Smettanikov agrees: "He really inherited quite a mess at WorldCom."

Sidgmore planned to hold the WorldCom job for only one year. As the company entered
bankruptcy, and as creditors and Wall
Street began pushing for, as Kagan puts it, "somebody from the outside who had no
connection to the old guard," Sidgmore
started looking for a new CEO.

"Michael [Capellas] is my choice," Sidgmore says. "Customers really like him and trust
him. And right now, trust and goodwill is
really, really important for our constituents."

Sidgmore says WorldCom will submit a reorganization plan by March, and that it could
emerge from bankruptcy by summer. He
"really, really" doubts WorldCom will be sold, citing regulatory hurdles.

I still haven't found what I'm looking for

Wither Sidgmore?

"I'm looking for the next UUNet," Sidgmore says with a laugh. "But it may take a few more
years to find it."

Sidgmore calls UUNet the "over the rainbow" company that comes around once in a lifetime.
He's placed a lot of bets in his
search for the next big thing.

Sidgmore is CEO, chairman and co-owner of ECI2 — E-Commerce Industries Inc. — a Vienna
company he founded with
long-time associate Paula Jagemann. ECI2 (http://www.eci2.com) started as an online office
supply sales Web site, "losing money
hand-over-fist," then sold that business to concentrate on selling e-commerce software.

The ECI2 story tells a lot about Sidgmore — his entrepreneurial bent, loyalty to friends,
and workaholism.

"He's very intense and borderline hyperactive," Jagemann says. "He's always keeping you
busy and engaged. He's very loyal to
people."

"John is obviously just a classic entrepreneur," says Netpreneur's
(http://www.netpreneur.org) Mary MacPherson. "He's driven,
he's passionate, he's outspoken. … People really want to bust their ass for him."

Sidgmore's hyperactivity is reflected in his other business involvements. He's a venture
partner at New Enterprise Associates, a
board member of several NEA portfolio companies and an angel investor in Capital
Investors.

Sidgmore doesn't plan to completely leave WorldCom — he will continue in some strategic
advisory capacity now that Capellas
has taken over.

But Sidgmore's eyes are definitely set on smaller challenges.

A year from now, he says, "I think I'll have another couple companies that are on their
way up, sort of wanna-be ECI2s, and
that's really what I love to do."

He'll probably have at least another U2 show under his belt, too.

E-mail: [email-masked] Phone: 703/312-8345

http://washington.bizjournals.com/washington/stories/2002/12/30/story1.html?t=printable

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From: Marcel <[email-masked]>
Date: Thu, 02 Jan 2003 16:35:38 -0500

I don't think this guy voted for him........

Love the Drake

http://www.dondrake.com/archives/000061.html

July 03, 2002

John Sidgmore is a fraud.

Looks like Worldcom will become the next Enron, but it's still too soon to see if Andersen
had anything to do with it.I missed the press conference with John Sidgmore, but from
what I read about it, this guy is a snake.The Chicago Tribune has an article about the
press conference with Sidgmore distancing himself from "the previous administration".

"While the deeds we uncovered were part of the past administration, I
want to apologize here today on behalf of everyone at WorldCom,"
Sidgmore said. The company's new management team and more than
60,000 employees shared the public's shock at the company's recent
financial revelations, he said.Sidgmore replaced former Chairman Bernard
Ebbers, who was fired in April from the company he largely built."I am
responsible for what we do now and for what we do in the future, and
what we're going to do is fully investigate any past transgression and
move forward in a completely open and honest manner," Sidgmore said.

Hmm, the past administration... right. Sounds like this guy started working at Worldcom
in April, and he's here to fix the mess made by the people that came before him. Mr.
Sidgmore seems to forget that he worked at Worldcom as a director since 1996. Here's a
quote from the 2000 Worldcom annual report (p.138):

        John W. Sidgmore, 50, has been the Vice Chairman of the Board and a
        director of WorldCom since December 1996. From December 1996 until the
        MCI merger, Mr. Sidgmore served as Chief Operations Officer of
        WorldCom. Mr. Sidgmore was President and Chief Operating Officer of
        MFS Communications Company, Inc. from August 1996 until December
        1996. He was Chief Executive Officer of UUNET Technologies, Inc. from
        June 1994 until October 1998, and President of UUNET from June 1994 to
        August 1996 and from January 1997 to September 1997. Mr. Sidgmore is a
        director of MicroStrategy Incorporated.

   This guy used to be the COO, it's not like he wasn't in the loop. His statements are
   nothing more than CYA on the grandest of scales. It seems the term "fiduciary
   responsibility" doesn't apply to Mr. Sidgmore, as well as being honest and forthright
   about this situation he is in. Or will it take a subpeona from Congress for him to talk
   straight - granted he doesn't hide behind the 5th Amendment.I'm sure this is just the
   beginning of more Worldcom bullshit to be thrown to shareholders. Mr. Sidgmore, start
   getting used to thicker pinstripes.

   Posted by drake at July 3, 2002 12:54 PM

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