WorldCom Followers Hear Bells in Capellas Talk

By the looks of things, WorldCom's answer to the telecom meltdown is to hire a guy who has never worked for a phone company before.

Hewlett-Packard (HPQ) President Michael Capellas resigned Monday amid reports that WorldCom's board has picked him to lead the company's reorganization. The Wall Street Journal reported that Capellas topped a list of candidates that also included BellSouth (BLS) executive Gary Forsee, as TheStreet reported recently.

A WorldCom spokeswoman said Monday that there was "nothing to say at this point." But company insiders expect a new chief to be named by year-end once auditors and creditors are satisfied that the books have been sufficiently cleansed. And if Capellas is indeed the failed telco's choice as a new leader, it will only add to the murmurings on Wall Street that WorldCom is plotting a path out of the financial mire that will ultimately lead to a deal with a big local phone outfit.

Outside the Bells

The possible choice of an outsider like Capellas comes as a bit of a surprise to observers who have grown accustomed to seeing top telecom spots filled by a never-ending supply of Baby Bell executives.

Michael Capellas

Capellas -- though well-recognized name and an accomplished businessman -- may be in some respects a consolation prize, say some observers. While he certainly has the clean background and operational leadership to fill the role, he lacks the firsthand industry expertise needed in this view to run a sprawling communications company.

WorldCom's board may elect Capellas, but the creditors' committee appointed by the court trustee has veto power, should they need it. The committee is interested in getting a candidate from within the industry to help navigate some of the arcane operations and numerous complex business arrangements typical of a large telco, says Marty Hyman, an industry consultant and adviser to the WorldCom creditor committee.