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WorldCom takes $80bn writedown
CLINTON, Miss. (Reuters) -- Bankrupt telephone and data services company WorldCom Inc. on Thursday said it would take almost $80 billion in charges to write off the value of goodwill, property, equipment and other intangible assets. It also said its net loss from continuing operations, before reorganization items, narrowed to $47 million on flat revenues of $2.2 billion in December. That compared with a net loss from continuing operations of $194 million on revenues of $2.2 billion in November. The $79.8 billion writedown is the second largest in U.S. corporate history, behind the $99.7 billion figure of AOL Time Warner last year. WorldCom, at one time the No. 2 U.S. long-distance carrier, filed for Chapter 11 bankruptcy protection in July last year, a month after revealing it had improperly booked $3.8 billion in expenses. WorldCom's rivals have claimed that they are winning customer accounts and market share as customers pare their business with WorldCom. AT&T Corp, the No. 1 U.S. long-distance telephone company, said it had won about $1.7 billion in contracts over the past seven months. Sprint Corp, the No. 4 U.S. long-distance company, has said it won about $400 million in contracts from about 200 corporate customers since May, 2002. WorldCom, which has warned that its accounting problems may exceed $9 billion, must file monthly financial statements with the bankruptcy court during its Chapter 11 reorganization. WorldCom's capital expenditures for December were about $108 million, up from about $48 million in November. The Clinton, Mississippi-based company said it ended December with about $2.5 billion in cash on hand, an increase of about $200 million from the beginning of the month. WorldCom also said it would write down $45 billion in goodwill, and reduce to $10 billion from $44.8 billion the value of its property, plant and equipment and other intangible assets. Those write-downs will result in total charges of about $79.8 billion. The company, which last year filed for the world's largest corporate bankruptcy, met with creditors this week to outline its business strategy and priorities for the next three years. Details of its business plan were not disclosed, but the company must file a reorganization plan with the bankruptcy court by April 15. It aims to emerge from bankruptcy around mid-year. WorldCom previously said it would target sales to small and mid-sized businesses, expand into more local telephone markets, and change its calling plans to try to strengthen revenues. It also aims to boost sales to corporations by broadening its network integration and consulting services. Last month the company said it would cut 5,000 jobs, or more than 8 percent of its work force, and trim annual costs by $2.5 billion. Two reports examining review WorldCom's past accounting practices and corporate governance issues are expected to be released in the next few months. Court-appointed examiner Richard Thornburgh is expected to release an updated report by May, sources familiar with the situation said. The Wall Street Journal reported on Wednesday that federal prosecutors in New York asked independent investigator William McLucas to delay the release of his report until June, saying that public disclosure of the report would harm their ongoing investigation into former WorldCom executives. Copyright 2003 Reuters. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.
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