Posted on 06/26/2002 6:53:40 AM PDT by ex-Texan
WorldCom Stock Halted After Shares Plunge
Wed Jun 26, 8:24 AM ET
NEW YORK (Reuters) - Shares of WorldCom Inc. were halted after they lost almost all of their remaining value in premarket trading on Wednesday after the No. 2 U.S. long distance phone company said it discovered accounting inaccuracies of nearly $4 billion.
The irregularities, which the Securities and Exchange Commission ( news - web sites) (SEC) said were of a magnitude never seen before, caused the company's already battered share price to plummet to 9 cents in premarket trade on Instinet.
By 7:10 a.m. EDT on Wednesday 13.6 million shares had changed hands on Instinet since 7 p.m. EDT the night before, according to a trader there.
The stock, which closed at 83 cents on Tuesday, 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, which joins a growing list of companies involved in accounting scandals, said late Tuesday it had fired its Chief Financial Officer Scott Sullivan after discovering the accounting discrepancy that would cause it to restate results for 2001 and the first quarter of 2002 and report net losses.
The news also rocked Asian stocks, with Tokyo's Nikkei index sinking more than 4 percent. 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.
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.
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 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.
At this rate they'll catch Salon.com!
And they say character doesn't matter...
The stock's value has gone down 99% plus in 2 years. It was over priced before, but not that overpriced. This rapid crash is a bit silly, no? If it wasn't fraud here, but say... a one time charge of 4 billion dollars, would the stock be dropping to 9 cents a share? I am actually going to look at it a bit, 10,000 shares for $900 might be a good gamble. Since it has crashed this low, just a 1 cent increase in share value is an 11 percent return, or it could crash to nothing. Hmmmmmm
I was thinking the same thing. How much could you lose?
One can only hope she donated her income from the sale of her stock to the DNC =o)
I attempted to identify their accounting firm. Worldcom's web site is jammed up.
I really do not believe that Andersen is the only rotten apple ....
And they booked 8 years worth of income from you in their financial reports already.
Ah......that's better. They closed the window.
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