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WorldCom to Restate $2 Billion More?

It looks like the fat lady won’t be singing for quite a while on the WorldCom Inc. (OTC: WCOEQ) debacle. In addition to the $7.1 billion in misstated revenues it has already admitted to, the company will inform the Securities and Exchange Commission (SEC) tomorrow that it may have made another $2 billion accounting error, according to a report in the Wall Street Journal today.

“We’re declining to comment on speculation,” a WorldCom spokesperson said today.

If true, the news should come as a shock to no one -- WorldCom’s gigantic balance sheet mistakes have become something of a tradition. WorldCom originally admitted to having misstated $3.8 billion in revenues back in June, but upped the number by more than $3 billion last month (see WorldCom's at $7.1 Billion and Counting). And in the chaos surrounding the WorldCom scandal, the additional $2 billion may not be the end of it.

“After the first one, nothing surprises me,” says Frank Dzubeck, president of consultancy Communications Network Architects. “The fate of WorldCom has already been decided… How many life sentences can you get?”

While WorldCom’s fraudulent accounting revelations over the summer helped push the company into the largest bankruptcy in history and led to the indictments of former CFO Scott Sullivan and former director of general accounting Buford Yates, tomorrow’s restatement is expected to do the company less harm.

The previous misstatements found on WorldCom’s books related to booking operating expenses as capital expenses, thus artificially boosting earnings. Those have been characterized as "accounting 101" mistakes. The additional $2 billion, on the other hand, is expected to involve accounting issues that have previously been open to interpretation.

Citing people close to the situation, the Wall Street Journal report stated that some of the revision may relate to writedowns of assets, while some is probably connected with improper accounting of the consolidation of foreign subsidiaries. The additional restatement could also be linked to the company’s previously stated intention to take a whopping $50.6 billion writeoff related to goodwill and other intangible assets, mainly left over from the company’s 60-company merger and acquisition spree.

But while a new restatement may not be as harmful to WorldCom as the first accounting revelations were, Dzubeck says that it will probably reduce the company’s chances of survival. “I’m getting more and more phone calls from concerned [WorldCom] customers,” he says. “They were [already] looking for a plan B… Now they’re starting to look at it much more closely.”

— Eugénie Larson, Reporter, Light Reading
www.lightreading.com
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lilgatsby 12/4/2012 | 9:44:28 PM
re: WorldCom to Restate $2 Billion More? Would anyone care to discuss the pros & cons of Wcom being allowed to proceed through bankruptcy? From my humble point of view, I don't see any pros and believe the other market players can easily split up their customers and continue on with business as usual. I'm just curious if there is any advantage to the public and the industry in whole to have these guys around.

lg
gea 12/4/2012 | 9:44:24 PM
re: WorldCom to Restate $2 Billion More? Actually WorldCom executives are hiding more than $1 Trillion in additional losses. With a group of Indian entreprenuers and H1B visa holders, they have stolen already more more than $100 Trillion worldwide.
The US government does nothing, because each member of congress and senate are each hiding over $1 Billion a piece. This is also why they will do nothing about junky equipment, such as Cisco, which only has 3 PhDs and 25 Masters degrees, in a company with over 500,000 people.
fiber_r_us 12/4/2012 | 9:44:23 PM
re: WorldCom to Restate $2 Billion More? Good one gea.. that gets a 5!
A service provider's view 12/4/2012 | 9:44:23 PM
re: WorldCom to Restate $2 Billion More?
I see no benefit and think it sends the wrong message to allow them to emerge from Ch. 11.

Jobs lost at WCOM will be re-created at competing companies as they win former WCOM customers.
BobbyMax 12/4/2012 | 9:44:21 PM
re: WorldCom to Restate $2 Billion More? A lot us remember very distinctly the way WorldCom was burn. Mr. Eber, with no exposure or training was able to buy MCI. FCC and SEC did not check into Mr. Webers background.

In WorldCom we are seeing a glimpse of corruption that has plagued our country since 1980. There will be more companies to fall as soon as SEC gets to examine the books.

If one looks at the stock options scheme -- one would come to the unscaple conclusion that it is way of enriching some people. It does not have any redeeming features. It deprives our less fortunate brothers of making a living. There are close to over 30 million people who make less than $6 an hour. As Dr. Welch's (former chairman of GE) forced disclosures how filled his pocket with millions and millions of dollars without disclosure to the shareholders. If I remember correctly, he pocketed close to $980 million dollars.
BobbyMax 12/4/2012 | 9:44:21 PM
re: WorldCom to Restate $2 Billion More? Dear "Dr." Gea:

It is amazing that you are a test engineer to pocket two patents. Congratulations.

Dr Gea, you are becoming vindictive and losing all your latents. If you are not up to par, there are no tutorials to help you. You may like to attend the local schools.

Reasd New York Times, Wall Street., and Washington Post.

Thank you Dr. "Gea".. Good luck to you.
AAL5 12/4/2012 | 9:44:20 PM
re: WorldCom to Restate $2 Billion More? Gea,

nicely on target keep up the good work.

AAL5
Prizm 12/4/2012 | 9:44:17 PM
re: WorldCom to Restate $2 Billion More? Wow, you even provoked a rare response from the "man" himself!
whitewater 12/4/2012 | 9:44:14 PM
re: WorldCom to Restate $2 Billion More? BobbyMax-

Would you please shut the f--- up already?!?!? You offer zero value to these boards.
DarkWriting 12/4/2012 | 9:44:13 PM
re: WorldCom to Restate $2 Billion More? Not to defend this person but did you ever notice that he/she almost never misspells the big words even though the grammar is atrocious? Maybe we should all stop getting caught up in the obviously bogus facts and start reading between the lines.

DW
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