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Monday, 10 June, 2002, 16:19 GMT 17:19 UK
Adelphia fires its accountants
Adelphia logo
Adelphia shares have tumbled 99% since mid-March

Embattled telecoms firm Adelphia Communications has fired the accountancy company that oversaw its books and told US regulatory officials it intends to restate its profits for the last two years.

The firm dismissed its accountants, Deloitte & Touche, for what it said were inaccuracies in its previous financial statements.

The move follows weeks of investigation by the Securities and Exchange Commission (SEC) and two federal grand juries.

Adelphia shares tumbled on Friday after press reports that the company may have kept two sets of accounting books and inflated the number of subscribers to its cable-television service.

'More doubts'

"The one thing Wall Street hates more than uncertainty is deception, and that's what we're talking about here," said Peter Andersen, an analyst at Delaware Management in Philadelphia.

In restating its profits, Adelphia said that in 2001, it actually made $1.2bn (820m), some 15% less than the $1.41bn it had previously reported.

For 2000, Adelphia revised its profits downwards to $1.2bn from $1bn, or 13% less than stated last year.

Future offices of Adelphia Communications in Coudersport, Pennsylvania
Adelphia's future offices remain vacant

Adelphia also revised downward its number of cable-TV subscribers to 5.763 million from 5.810 million, a difference of about 47,000 viewers, but far fewer than the half million difference the Wall Street Journal reported on Friday.

"The subscriber shortfall further raises doubts in investors' minds about Adelphia's accounting elsewhere," said Bob Berzins, a bond analyst at Lehman Brothers.

Penny stock

The Pennsylvania-based firm blamed the disparity in subscriber numbers as well as the inflated profits statements on "inaccuracies in previously reported data."

Adelphia's brief filing with the SEC on Monday - less than 50 words - gave no reason for the firing of Deloitte & Touche, although the accountancy firm may itself become the focus of investigation as it put its stamp of approval on Adelphia's books.

In March, Adelphia disclosed it made $2.3bn in off-balance-sheet loans to the firm's founding family, the Rigas.

In late Monday morning trade in New York, Adelphia's shares were down 7 cents, or 23%, at 23 cents.

The stock has lost more than three quarters of its value since mid-March.

The firm's stock is no longer traded on the Nasdaq exchange.

Late last month Nasdaq said Adelphia's failure to disclose financial statements for last year put it in breach of the exchanges rules.

Adelphia, the US' sixth-largest cable operator, is now traded an "over-the-counter" basis, meaning its shares are not listed on any exchange.

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