Williams 2002 Case Study Essay

The Williams 2002 case study assesses the financial problems incurred by Williams, a company that specialized in activities such as purchasing, selling, and distributing energy commodities. The company has a long history and was founded in Tulsa in 1918 by Miller and David Williams, who previously owned a pipeline construction business in Arkansas. The growth of the company during the late 1990s and early 2001 can be partially attributed to its success in the energy market. However, it primarily attributes its success to its profitable investments in the telecommunications business. An economic recession combined with poor financial management contributed to decreased profitability in its telecommunications segment. This case study will assess the dilemma posed by the poor performance of the telecommunications segment of the business from a management and finance standpoint. …show more content…
The inability of Williams to anticipate the maturation of the market caused the company to invest in products that promised decreased return-on-investment. Further, the reduced profitability undermined the ability of the company to meet its debt burden. The poor performance of Williams Communication Corporation encouraged Standard & Poor’s to lower the company’s corporate credit rating to B, which reflected the poor performance and high risk taken on by the company. Further, the company experienced simultaneous threats to its energy segment. The fall of Enron Corporation decreased consumer confidence in the energy commodities business, causing Williams to lose investors. The stock prices of Williams reflect the adverse impact that unstable energy and telecommunications markets had on the business. Decreasing form its July 2002 rates of $2.95 per share, the stock prices of the company decreased by approximately 90 percent, demonstrating a significant decrease in