BBC NEWS Americas Africa Europe Middle East South Asia Asia Pacific Arabic Spanish Russian Chinese Welsh

 You are in:  Business
Front Page 
UK Politics 
Market Data 
Your Money 
Business Basics 
Talking Point 
In Depth 

Commonwealth Games 2002

BBC Sport

BBC Weather

Tuesday, 12 March, 2002, 18:26 GMT
Watchdog scrutinises Worldcom
WorldCom logo
Worldcom has become the latest US telecoms firm to come under closer scrutiny from stock market regulators.

Worldcom, the US' second biggest long-distance phone company, said on Tuesday that the Securities and Exchange Commission last week asked to inspect some of its financial records.

Analysts said the documents in question relate to sales commissions and loans advanced to some executives, but do not concern Worldcom's method of revenue recognition.

The company said its accounting practices are in order, and stressed that it plans to cooperate fully with the SEC 's request.

Shares slide

But the news unnerved investors, pushing Worldcom shares down 11% to $7.99 at about 1700 GMT.

Worldcom, hit hard by weaker profits and concerns over its heavy debts, has already seen its share price fall steeply in recent months.

The company last year announced a series lay-offs in an attempt to cut costs.

Probe widens

Worldcom is the third major US telecommunications company after Global Crossing and Qwest Communications to have its accounts checked by the SEC.

The inspections come against a background of heightened investor sensitivity to opaque corporate bookkeeping in the wake of the shock collapse of former energy trading giant Enron.

Enron's bankruptcy, which followed revelations that the firm had concealed debts using a complex series of external financial partnerships, made investors wary of all companies with unconventional business models or accounting methods.

On Monday, the SEC asked Qwest to submit documents on how it categorised certain types of revenues over the last two years.

The stock market watchdog opened an investigation into Global Crossing, the bankrupt fibre-optic cable telecommunications firm, in January.

Enron's auditors Andersen, heavily criticised for failing to flag up irregularities in the energy giant's accounts, also signed off Worldom and Qwest's books.

See also:

02 Oct 01 | Business
WorldCom to cut 1,000 jobs
28 Sep 00 | Business
Worldcom tests merger decision
08 Feb 01 | Business
Worldcom profit drops 44%
07 Feb 02 | Business
WorldCom denies rumours on its fall
Internet links:

The BBC is not responsible for the content of external internet sites

Links to more Business stories are at the foot of the page.

E-mail this story to a friend

Links to more Business stories