Metropolis Reality Forums

Sponsored by: The Fans!

Welcome, Guest. Please Login or Register.
Nov 23^rd, 2024, 6:13pm

Upcoming Premiere Dates:
Survivor 23, Season premiere
Thursday, September 14 (8:00-9:30 PM, ET/PT) on CBS

Metropolis Reality Forums Ť WorldCom ť

   Metropolis Reality Forums
   Off-Topic Forums
   In the News (Moderators: lakelady, yesteach, MediaScribe, Bumper, Isle_be_back)
   WorldCom

Previous topic | New Topic | Next topic »

Pages: all 1 2

Add Poll

Notify of replies

Send Topic

Author

Topic: WorldCom (Read 1536 times)

Rhune
ForumsNet Administrator

Gender:

Posts: 292

WorldCom
« on: Jun 26^th, 2002, 12:03pm »

Quote

Modify

SAN FRANCISCO/PHILADELPHIA (Reuters) - WorldCom Inc. said it had uncovered improper accounting for almost $4 billion in expenses, raising bankruptcy fears for the U.S. telecoms company and shocking investors reeling from accountancy scandals.

The No.2 U.S. long-distance telephone and data services said late on Tuesday it had fired its Chief Financial Officer Scott Sullivan after discovering the irregularities, which the Securities and Exchange Commission ( news - web sites) said were of a magnitude never before seen.
WorldCom said it would restate results for 2001 and the first quarter of 2002 to show net losses, in what may be the largest such revision ever. It joins a growing list of U.S. companies that have revealed accounting improprieties.

The news rocked Asian stocks, with Tokyo's Nikkei index sinking four percent and Seoul's Kospi losing 7.15 percent on Wednesday. Technology and telecom stocks were especially hard hit. Asia telecom bonds fell, and the dollar dropped to a seven-month low.

European shares opened with sharp losses and Wall Street appeared poised to follow suit.

The SEC, which had been investigating WorldCom, said it had ordered the company to file a detailed report on the disclosures, which rocked already shaky investor confidence in U.S. accounting practices.

"The WorldCom disclosures confirm that accounting improprieties of unprecedented magnitude have been committed in the public markets," the SEC said in a brief statement.

The Washington Post reported on Wednesday that the Justice Department ( news - web sites) had begun a criminal investigation.

FINANCING TALKS THREATENED

The massive accounting problems could also derail WorldCom's talks with its lenders to secure $5 billion in financing, without which it may face a cash-crunch next year, or even bankruptcy, analysts said.

Robertson Stephens, which downgraded its rating on WorldCom to "market underperform" from "strong buy," said "a bankruptcy filing is highly likely within the next 12 months."

WorldCom, which gets 89 percent of its revenues from the United States, said it planned to cut 17,000 jobs, or more than 20 percent of its workforce, starting on Friday, in a bid to save $900 million a year. Its 2001 revenues were $35.2 billion.

It also said it would slash another 40 percent from sharply lower capital spending plans, taking its annual investment budget to $2.1 billion.

The revelations and restructuring came just seven weeks after co-founder Bernie Ebbers, who built the company through more than 60 acquisitions over the past decade, resigned as chief executive officer.

"When you look at the history of WorldCom, and their acquisition trail, you have a classic wheeler-dealer. And now this is the age were wheeler-dealers get called for what they are," said Frank Dzubeck, president of consulting firm Communications Network Architects.

Shares of WorldCom plummeted, losing almost three-quarters of their remaining value as they hit a low of 20 cents in after-hours trade from a close of 83 cents on the Nasdaq market.

The stock had traded as high as $15 at the start of the year and had touched a peak of more than $64 in June 1999.

WorldCom suppliers also found themselves on the firing line. Fujitsu ( news - web sites) Ltd., which is estimated to receive $40 million from WorldCom in revenues, saw its shares drop over four percent.

ANDERSEN INVOLVED

Clinton, Mississippi-based WorldCom is the latest company linked to auditing firm Andersen to face accounting problems. Andersen, whose role as the auditor of Enron helped lead to the energy trader's collapse, audited WorldCom's financial statements for 2001.

In a statement, Andersen said that WorldCom had withheld key information and not consulted its auditors about the accounting treatment of the expenses.

WorldCom said that accounting irregularities involving expenses misrecorded as capital expenditures had inflated its cash flow and that otherwise it would have reported a net loss for 2001 and the first quarter of 2002.

The accounting irregularities, which did not conform to Generally Accepted Accounting Principles, included transfers between internal accounts of $3.06 billion in 2001 and $797 million in the first quarter of 2002.

"SHOCKED BY DISCOVERIES"

"Our senior management team is shocked by these discoveries," said John Sidgmore, WorldCom's CEO of less than two months. He previously served as the company's vice chairman.

WorldCom said it had notified the SEC and asked its new accounting firm, KPMG, to review of its financial statements for 2001 and 2002.

Restating the results was not expected to hurt WorldCom's cash position, the company said. WorldCom has $30 billion in total debt, but no debt payments due in the next two quarters.

The grim news would make it harder for WorldCom's new management to assert control and may put creditors in power since WorldCom has so much debt, said Blair Levin, an analyst at Legg Mason in Washington and a former FCC official.

IP Logged

crypto
ForumsNet Member

Posts: 316

Re: WorldCom
« Reply #1 on: Jun 26^th, 2002, 1:10pm »

Quote

Modify

Can someone explain to me how a 3.8 billion dollar accounting error can be made? This just boggles my mind. Shocked

IP Logged

GAS
ForumsNet Member

Are you speaking or are you dreaming?

Posts: 77

Re: WorldCom
« Reply #2 on: Jun 26^th, 2002, 2:35pm »

Quote

Modify

Easily Crypto, we all know that you have that 3.8 billion dollars in your back pocket. Wasn't that your consulting fee?

IP Logged

crypto
ForumsNet Member

Posts: 316

Re: WorldCom
« Reply #3 on: Jun 26^th, 2002, 2:37pm »

Quote

Modify

on Jun 26^th, 2002, 2:35pm, GAS wrote:

Easily Crypto, we all know that you have that 3.8 billion dollars in your back pocket. Wasn't that your consulting fee?

LOL LOL LOL
I wish!

IP Logged

MzzJoplin
ForumsNet Member

Thaid no more ...

Gender:

Posts: 584

Re: WorldCom
« Reply #4 on: Jun 26^th, 2002, 3:20pm »

Quote

Modify

Hey Crypto ... I didn't realize you were so wealthy ... care to help a poor college student out with a loan? Wink

IP Logged

"It's hard to be free, but when it works, it sure is worth it ... " ~ Janis Joplin

crypto
ForumsNet Member

Posts: 316

Re: WorldCom
« Reply #5 on: Jun 26^th, 2002, 3:27pm »

Quote

Modify

on Jun 26^th, 2002, 3:20pm, Thai Dyed wrote:

Hey Crypto ... I didn't realize you were so wealthy ...

I didn't either.

IP Logged

MzzJoplin
ForumsNet Member

Thaid no more ...

Gender:

Posts: 584

Re: WorldCom
« Reply #6 on: Jun 26^th, 2002, 3:36pm »

Quote

Modify

I didn't either.

Hmmm ... does Aurther Anderson do your accounting? Grin

IP Logged

"It's hard to be free, but when it works, it sure is worth it ... " ~ Janis Joplin

crypto
ForumsNet Member

Posts: 316

Re: WorldCom
« Reply #7 on: Jun 26^th, 2002, 3:56pm »

Quote

Modify

on Jun 26^th, 2002, 3:36pm, Thai Dyed wrote:

I didn't either.

Hmmm ... does Aurther Anderson do your accounting? Grin

:roflmao:

IP Logged

Roo94
ForumsNet Member

Gender:

Posts: 125

Re: WorldCom
« Reply #8 on: Jun 27^th, 2002, 7:22am »

Quote

Modify

Sigh, just how many more of these big companies are out there cooking the books like this Huh

? Makes me so mad! Angry

We had a small investment is WorldCom (very small - we had 2 or 3 shares of stock and LittleRoo had 2 shares - gifts from my parents). Not a whole lot - but never the less, it burns me. Can't imagine all those people who had loads of the stock!

IP Logged

BlankWillWin
ForumsNet Member

The Psychotic Predictor

Gender:

Posts: 1257

Re: WorldCom
« Reply #9 on: Jun 27^th, 2002, 8:37am »

Quote

Modify

on Jun 26^th, 2002, 1:10pm, crypto wrote:

Can someone explain to me how a 3.8 billion dollar accounting error can be made? This just boggles my mind. Shocked

It's called fraud, and I REALLY doubt that the accounant did it without the knowlegde and authorization of Senior Management. Angry

Eric.

IP Logged

The Artist formerly known as Tina, Ethan, Neleh, Helen, Deena, Tijuana, & AmberWillWin.

crypto
ForumsNet Member

Posts: 316

Re: WorldCom
« Reply #10 on: Jun 27^th, 2002, 9:06am »

Quote

Modify

I would almost bet that senior management knew exactly what was going on and started pulling their stocks last year. It's the whole concept of 3.8 billion dollars that just has me floored. That's a hell of a lot of money being hidden. The sad part is the stock market and lots of innocent people are going to suffer greatly from this.

IP Logged

Bumper
ForumsNet Moderator
Moderator
ForumsNet Member

A Virginia Member of the RED SOX Nation

Gender:

Posts: 2946

Re: WorldCom
« Reply #11 on: Jun 27^th, 2002, 8:43pm »

Quote

Modify

Man! The accounting profession is sure taking a hit!
Accountants are starting to make Lawyers look like Priests!!

Uh, on second thought, maybe that wasn't the best comparrison to use. Roll Eyes

IP Logged

If U R reading these old posts, know that we were once a great, active cyber-community, but as in all things..Time moves on. This is now a Ghost Town.

Addams
You Bet Your ASS Team
ForumsNet Member

Gender:

Posts: 5398

Re: WorldCom
« Reply #12 on: Jun 27^th, 2002, 9:01pm »

Quote

Modify

on Jun 27^th, 2002, 8:43pm, Bumper wrote:

Man! The accounting profession is sure taking a hit!
Accountants are starting to make Lawyers look like Priests!!

Uh, on second thought, maybe that wasn't the best comparrison to use. Roll Eyes

LOL I am more than happy to share the notoriety Roll Eyes

IP Logged

Mags
ForumsNet Member

Gender:

Posts: 221

Re: WorldCom
« Reply #13 on: Jun 27^th, 2002, 9:07pm »

Quote

Modify

addams..I still Luv ya!! Kiss

IP Logged

If you judge people, you have less time to Love them. Anon.

Maggi

Bumper
ForumsNet Moderator
Moderator
ForumsNet Member

A Virginia Member of the RED SOX Nation

Gender:

Posts: 2946

Re: WorldCom
« Reply #14 on: Jun 27^th, 2002, 11:14pm »

Quote

Modify

Hey Addams, you know I'm just kidding. I still luv ya'! Kiss

Hell, some of my best friends are lawyers . . . . .just because I hide the silverware when they come over shouldn't matter. Grin

IP Logged

If U R reading these old posts, know that we were once a great, active cyber-community, but as in all things..Time moves on. This is now a Ghost Town.

Pages: all 1 2

Add Poll

Notify of replies

Send Topic


Previous topic \| New Topic \| Next topic »