Worldcon

Worldcom, the owner of MCI and Uunet, is one of the largest telecom players in the world. Uunet is the largest Internet backbone company in the US, serving close to half of the US needs. It has been embroiled in a scandal that it would be close to impossible not to declare bankruptcy.

An internal auditor has discovered an anomaly in the range of $4 billion (P200 billion or about 2.5 times PLDT’s total revenue). Worldcom reclassed $4 billion of line charges to capital expenditure. As a company measured on EBITDA (Earnings before interest, taxes, depreciation and amortization) basis, the impact is that by dropping the expense below the EBITDA line, what should have been a loss turned into a profit by reflecting only 20 percent of the full charge for the next five years. And this 20 percent is not even in the EBITDA line.

The US Congress immediately subpoenaed the ex-CEO, ex-CFO, Arthur Andersen and Jack Grubman, the telecom analyst (his annual compensation by the way is $20 million a year, hmmm… maybe I had a typo in his name, there should probably be an "a" instead of "u"), for a grueling afternoon.

What was interesting was how the congressional committee went about its questions? Clearly, only one or two members of the committee asked cogent, intelligent questions as opposed to grandstanding and rhetorical ones. (Of course, I was still glued to the hearing, very similar to the Senate hearings over Jose Velarde months ago. Sometimes I wonder if these congressmen have Filipinos in their staff or have been watching our Senate hearings. The grandstanding is awfully similar and the substance is wanting.)

My Two Cents: For financial readers, always read the footnotes. That is where the skeletons are hidden.

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Is America cool? Yes and No

I’m on vacation on the East Coast and I can’t help but do some comparisons.

Cellphone. Three different systems: TDMA, CDMA and maybe, GSM. Great marketing between Verizon and Cingular but at the end of the day, my tri-band had a hard time working.

My Two Cents: Not so cool.

Supermarket. They have self-service check-out lines. Using a key chain barcode, they give you discounts and of course, capture the holy grail – your buying habits. (I used my in-laws’ which is probably throwing off the database right now). They also have self-service deli/butcher service where my orders for ham and cheese are inputted while I buy the rest on the grocery list.

My Two Cents: Cool, except for the deli section where, although the order processing is convenient, they do not have enough butchers to fill the orders.

Trains. Took the train a few times. They have self-service ticket dispensers taking in cash or credit cards.

My Two Cents: Cool, no lines.

Kidnappings of little girls. Americans are now starting to fear what Filipinos have been going through – the kidnapping of their kids. Elizabeth Smart was kidnapped and is still not found, nor is there any ransom demand.

My Two Cents: Not cool. I hope this is not another Filipino export a la "Love Bug," although we do have the experience curve for it.

Free Internet. I have been using free Internet access at the public libraries. (Thanks to Lou of the Westbrook library.) But I would have been happy to get access at an Internet café. There are no Internet cafés where I am staying because computers and Internet access are cheap enough for everyone.

My Two Cents: Not so cool. I don’t like being restricted to library hours when I log on.

Mac Store. Very clean and clutter-free, the only store I know with T-1 (fast broadband access) line to a retail store.

My Two Cents: Way cool!

On Vacation. No phone calls. No bill collectors. No whining.

My Two Cents: Way, way cool!

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Dickson Co is CFO (C is for Cheap) for both Dfnn and HatchAsia.com. For comments or suggestions, e-mail at [email protected].