Long Before Tech CEOs Turned To Layoffs To Cover AI Expenses, There Was WorldCom
Slashdot
by EditorDavidFebruary 23, 2026
AI-Generated Deep Dive Summary
In 2002, WorldCom, once the second-largest long-distance company in the U.S., filed for Chapter 11 bankruptcy after revealing $11 billion in accounting fraud, the largest at the time. This scandal led to CEO Bernard Ebbers being sentenced to 25 years in prison. The company's downfall began with an employee's speculative Excel model suggesting internet traffic could double every 100 days, a claim with no evidence but widely believed by competitors.
WorldCom's false claims triggered a frenzy of infrastructure investment and overbuilding across the industry. Companies like AT&T and Sprint cut tens of thousands of jobs to reduce costs and match WorldCom's perceived efficiency, driven by market pressure to keep up. This speculative behavior, fueled by unverified data, severely harmed the tech industry.
The story highlights the dangers of relying on unverified claims and the competitive pressures that drive companies to make reckless decisions. Today, as tech firms face similar challenges with AI expenses and layoffs, understanding this history underscores the importance of cautious planning and ethical business practices to avoid repeating past mistakes.
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Originally published on Slashdot on 2/23/2026