WorldCom's down -- and Cerf's up

The accounting mishap comes during a tough patch for WorldCom, which could face Nasdaq delisting if its share price remains below $1.

With a market capitalization that has tumbled 99.5 percent from its peak to $2.7 billion at the close of trading Tuesday, WorldCom's expected heavy losses Wednesday won't have the same effect on the stock market that they once might have.

But accounting misdeeds may only unnerve investors leery about the accuracy of corporate profits in the aftermath of Enron's bankruptcy. Just like Enron, Arthur Andersen, found guilty earlier this month for obstruction of justice, *signed off* on WorldCom's books during the time. Andersen issued a statement late Monday saying that the firm's work for WorldCom complied with SEC standards and that the WorldCom CFO did not tell Andersen about the line cost transfers. Andersen also said that when it found out about the transfers, it advised the company that "WorldCom's financial statements for 2001 should not be relied upon."

WorldCom late Tuesday said it asked its new auditors, KPMG LLP, to undertake a comprehensive audit of the company's financial statements for 2001 and 2002. The company will reissue unaudited financial statements for 2001 and for the first quarter of 2002 as soon as practical.

The Securities and Exchange Commission, which WorldCom said it notified, declined to comment on the news.

In addition to the job cuts, the company said it is selling a series of non-core businesses, including exiting the wireless resale business, which alone will save $700 million annually.

WorldCom stock began falling in late 1999 as businesses slashed spending on telecommunications. A series of downgrades this year have raised borrowing costs for WorldCom, which is struggling with about $32 billion in debt. WorldCom said it has no debt maturing during the next two quarters.

Former Chief Executive Bernie Ebbers resigned earlier this year amid questions about $366 million in personal loans from the company and a federal probe of its accounting practices.

[ Reply to This | Parent ]

1 reply beneath your current threshold.

Privacy Policy: We will not knowingly give out your personal data -- other than identifying your postings in the way you direct by setting your configuration options -- without a court order. All logos and trademarks in this site are property of their respective owner. The comments are property of their posters, all the rest © 2001, 2002, 2003, 2004, 2005, 2006, 2007, 2008 by ICANNWatch.Org. This web site was made with Slashcode, a web portal system written in perl. Slashcode is Free Software released under the GNU/GPL license.
You can syndicate our headlines in .rdf, .rss, or .xml. Domain registration services donated by DomainRegistry.com