Uh oh, Worldcom is in *BIG* trouble now...

[N8Magic]

After Hours Trading -- WCOM
Last: 0.35 Change: -0.48 Volume: 2,386,100

WorldCom Uncovers Improper Accounting

June 25, 2002 8:14:00 PM ET
CLINTON, Miss. (Reuters) - Telecommunications company WorldCom Inc.(WCOM) said on Tuesday that it had fired Chief Financial Officer Scott Sullivan after an internal audit found improper accounting of more than $4 billion in expenses over five quarters.

The company said it would restate results for the first quarter of 2002 and all of 2001 and said it plans to lay off 17,000 workers beginning on Friday.

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

The company said 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.

Accounting firm Andersen had audited the company's 2001 financial statements for 2001 and reviewed WorldCom's books for the 2002 first quarter.

© 2002 Reuters

---

Could this be the next Enron? :Q When will these greedy executives learn that fudging with the books will eventually catch up with you in a big way?

Discuss.

 

[bunker]

Well at least they caught it and are fessing up to it.

But your title is correct, they are screwed.

 

[Harvey]

It seems to be a freaking disease running rampant amongst the accounting firms, the major stock brokerages and the big time cash floaters. PBS had a scathing expose about it, the other night.

I wonder if Martha Stewart dumped her WorldCom stock, yesterday?

 

[Miramonti]

The writing was already on the wall when it started trading under $2, and stayed there...portfolio managers and institutions don't sell that cheap unless they know something about this or know that its not going to make its debt payments.

If this isn't the writing on the wall I don't know what is.

 

[Adul]

what else is next...

 

[kranky]

These executives don't have much risk. They've already collected their millions, and if they get caught, they get fired. I don't think that keeps them awake at night. And there should be massive condemnation of such tactics by executives of other companies.

If they knew they'd go to prison for 30 years for cooking the books, they might not be so free and easy. And at a company the size of WorldCom, there had to be dozens of people who knew what was going on.

 

[N8Magic]

WCOM is now down to $0.20/share on the Island ECN.

People are speculating that they will be bankrupt soon, as the $4,000,000,000 mistake accounts for one quarter of their total revenue for 2000, and the banks won't touch them with a ten foot pole.

:Q

(prepare to lose some money in the market tomorrow )

 

[RossMAN]

Damn 20 cents a share?

 

[ShotgunSteven]

Not familiar with the name, who do they own/are they owned by?

I agree, time to start cracking down on those cooking the books. :disgust:

 

[Rastus]

Worldcom is MCI

 

[N8Magic]

Originally posted by: ShotgunSteve
Not familiar with the name, who do they own/are they owned by?

I agree, time to start cracking down on those cooking the books. :disgust:

They're pretty much the largest communications provider in the US. Check out their homepage: http://www.worldcom.com

This is basically Enron 2: The Second Wave

 

[Miramonti]

should we buy some at $.20?

 

[Cyberian]

Telecommunications company WorldCom Inc.(WCOM) said on Tuesday that it had fired Chief Financial Officer Scott Sullivan after an internal audit found improper accounting of more than $4 billion in expenses over five quarters.

How does a company not notice $4 Billion MIA?

 

[ShotgunSteven]

This just in from Tom Daschle: "I don't know what all this means, but I bet its Bush's fault!"

 

[Miramonti]

Originally posted by: Cyberian

Telecommunications company WorldCom Inc.(WCOM) said on Tuesday that it had fired Chief Financial Officer Scott Sullivan after an internal audit found improper accounting of more than $4 billion in expenses over five quarters.

How does a company not notice $4 Billion MIA?

Its easy to not notice it when you're trying to cover it up....the better question probably is "how did they cover it up?" I hope kpmg takes a dive too if they are responsible for allowing this.

 

[ViRGE]

KPMG isn't responsible, it's good ole' AA again.

In its statement, the company said that Arthur Andersen, which also came to notoriety in the Enron collapse, had audited the financial statements in question. Its current auditor is KPMG

 

[JellyBaby]

Well they said to expect more "Enrons" and here we see round 3 (or is it round 2? I don't know, I don't do rounds).

WorldCom has nearly 100,000 employees and they just layed off 17,000 with more to come I'm sure.

WorldCom = MCI and also UUNet. UUNet is one of the largest ISPs and many national and local ISPs are UUNet resellers. This could get ugly.

What will happen? Some suits will go to golf course "prison", the company may fall, those 100,000 employees may be collecting unemployment soon, faith in the stock market is once again shattered.

Who thinks Bush, as he did after Enron, will maintain the "we need to go slow on reform" rhetoric?

 

[Miramonti]

Originally posted by: ViRGE
KPMG isn't responsible, it's good ole' AA again. In its statement, the company said that Arthur Andersen, which also came to notoriety in the Enron collapse, had audited the financial statements in question. Its current auditor is KPMG

Thats unbelievable if they were corrupt again. I wish they just put a fork in it.

WorldCom = MCI and also UUNet. UUNet is one of the largest ISPs and many national and local ISPs are UUNet resellers. This could get ugly.

Dang I didn't know it was UUnet too. and 100k employees total? You're not kidding...this could get real ugly. I think I read they have $35 billion in debt too!

 

[FoBoT]

Originally posted by: jjsole
should we buy some at $.20?

um, no , wait for it to drop to $0.01

and this will be the final nail in AA, stick a fork in them, they are done

 

[UNCjigga]

Hopefully this will help Sprint...

 

[PsychoAndy]

its not particularly a good sign for a multi-billion dollar company to have a stock valued less than a gallon of unleaded

 

[Miramonti]

Originally posted by: FoBoT

Originally posted by: jjsole should we buy some at $.20?

um, no , wait for it to drop to $0.01

and this will be the final nail in AA, stick a fork in them, they are done

Sorry but if it opens at .20, and then sells off to .10, I'm going to buy atleast 10k shares. Even if I only sell them at .15, thats a 50% return. They aren't going bankrupt and liquidating everything tomorrow. Word!

 

[JellyBaby]

ts not particularly a good sign for a multi-billion dollar company to have a stock valued less than a gallon of unleaded

 

[d33pt]

Andersen and KPMG was also involved in the Peregrine accounting scandal.. that resulted in laying off 50% of staff a couple of weeks ago...

 

[spanky]

and said it plans to lay off 17,000 workers beginning on Friday

oh crap!!! :Q