WorldCom Lays Off 17,000 Workers
Firm Cuts 2,000 Area Jobs; Employees Cite Frustration, Uncertainty

By Yuki Noguchi
Washington Post Staff Writer
Saturday, June 29, 2002; Page A01

WorldCom Inc. yesterday laid off 17,000 workers -- including about 2,000 in the Washington area -- as the telecommunications giant struggled to survive in the midst of an accounting scandal that threatens to force it into bankruptcy.

The Washington area, home to the largest share of WorldCom employees, suffered the biggest share of the layoffs. WorldCom indicated in the past month that the layoffs were coming, before announcing this week that it had improperly accounted for $3.9 billion in expenses. It has been charged with accounting fraud by federal regulators and is under criminal investigation by the Justice Department.

The company is laying off about 21 percent of its global workforce. At WorldCom's sprawling 534-acre campus in Ashburn in eastern Loudoun County, more than 500 people received pink slips before noon yesterday.

"The worst part of being laid off right now is there are a lot of people I'm going to compete with," Mark Hayes said after driving out of the parking lot.

About 100 employees of the nearly 2,000 working at WorldCom headquarters in Clinton, Miss., were notified that they'd lost their jobs. Kimberly Spencer, 31, was one of the first.

"Any of you have any jobs?" she asked reporters who surrounded her white Chevrolet Cavalier.

The silver lining was her severance package, said Spencer, who worked in the accounts payable department for three years. "I'm kind of relieved that it is over with," she said. But she added, "People are frustrated because we worked so hard for this company."

WorldCom grew from a small long-distance telephone company into one of the telecom industry's biggest players through more than 60 acquisitions over the past 15 years. It had a global workforce of 80,000.

Those who survived yesterday's layoffs worried about job security and wondered how many customers WorldCom would lose. Those who were laid off fretted that a bankruptcy filing could bring to an end the biweekly severance checks they were told they would receive.

That was the main topic of conversation at Kirkpatrick's Irish Pub, a neighborhood bar nestled in an Ashburn housing development, where 70 to 80 former workers and some of their still-employed colleagues took advantage of the 20 percent discount offered to WorldCom employees by pub owner Kirk Harris.

For the past several weeks, Harris said, his after-work regulars confided to him that "it's a morgue over there," he said.

"It's a blessing in disguise," Harris said. "Why would you want to work for them anymore?"

"It's going to be impossible for them to maintain their customer base. I don't know that they can pay eight weeks of severance," said a woman who sold Internet services for WorldCom's UUNet division.

In offices around the country yesterday, employees' departures were well orchestrated, following a pattern now familiar to employees, who have witnessed two major rounds of layoffs at the firm in the past year and a half.

Employees reported to work at their normal starting time, and around 11 a.m. those included on "the list" received e-mail notifications from their department supervisors and were summoned into a conference room. There, they received a few papers and were instructed to pack their personal belongings, according to current and former employees.

The names on the layoff lists were "hush-hush until the last minute," although employees knew for weeks that job cuts were coming, said Troy Robertson, who until yesterday was a project manager in Ashburn.

Friends and relatives sat by their phones, waiting for news. One man said his fiancee, a network engineer who worked in Ashburn, kept calling him throughout the day. She kept her job, but "it's been doom and gloom," he said. Even now, he said, there's very little security in having a job at a company besieged by investigative inquiries.

"We'd already laid out different plans" in case his fiancee loses her job, he said. "We're keeping those handy."

As one of the nation's biggest telecom hubs, Washington is no stranger to layoffs, having witnessed at least 20,000 at various telecommunications firms in the past year and a half. Still, the number of the WorldCom job cuts are expected to have a painful impact on the local economy.

WorldCom laid off about 1,300 people in Virginia, where the unemployment rate during the month of May was 4.1 percent. In Maryland, where about 700 people were laid off, the unemployment rate was 4.7 percent.

To ease the impact, Reps. Frank R. Wolf (R-Va.) and Thomas M. Davis III (R-Va.) began organizing a job fair for WorldCom's laid-off workers, to be held in Northern Virginia's tech corridor within a month, said Davis's spokesman, David Marin.

For 25-year-old Anthony DeMarco, who worked in Ashburn, it is already the second layoff in his short professional career. He lost a job in the Washington office of Dallas-based Airband Communications last fall and, after a four-month stint of unemployment, had been selling WorldCom's Internet services out of Ashburn since February. He said he and his colleagues "felt relieved they were getting laid off because they believe it would be tough if they stayed."

Some of the patrons at Kirkpatrick's Irish Pub, both current and newly laid-off employees of WorldCom, wore T-shirts distributed to workers when John W. Sidgmore became WorldCom's chief executive two months ago. The shirts bear the message "In Sidgmore We Trust."

"It's a little like when Anthony Williams took over after Marion Barry. Sidgmore has ethics and he's going to clean things up," said a program manager who learned yesterday that her job had been spared.

But many of those who remained said they were working on their r鳵m鳠and are getting ready to jump ship as soon as possible.

"The big joke where I am is that we all feel like violin players on the Titanic," said one management employee.

The phones were mercifully silent for one sales representative, who was sent back to work yesterday afternoon after most of his friends were dismissed.

"Today's not the kind of day I feel like talking to anyone," he said, surveying a landscape where two-thirds of the desks in his 85-person office were empty. "It's tough. Our future is just as uncertain as those who were laid off today. We have absolutely no faith in the management who are left. Nobody's here. It's barren. It's a ghost town."

At least one of the worries that workers expressed this week appears to have been allayed. U.S. District Judge Jed Rakoff, responding to a lawsuit brought by the Securities and Exchange Commission, barred the firm from paying its officers, directors or employees more than $100,000 in severance, a level that is far more than what most employees can expect.

"Some people at the top were making some very, very, very bad decisions," said Robertson, who worked in Ashburn for a year and a half. They should be punished in "the severest fashion," he said.

Staff writers Renae Merle, Michael Laris and Rosalind S. Helderman contributed to this report.