WorldCom implodes

erik_kosberg · #1 06-05-2002, 03:18 PM

http://story.news.yahoo.com/news?tmp...atoday/4166176

This on top of the 12,500 they already let go. I'm so glad that I thought about investing in WCOM about a year ago and decided against it.

poseidon · #2 06-05-2002, 06:05 PM

I'm so glad that I cut my losses with WCOM almost a year ago.

brian_igo · #3 06-07-2002, 03:38 AM

Pud over at FC had the best recap I've seen on this:

"Its a small Worldcom after all..."

On a related side note: Anyone else notice that the worse this dotbomb and "New Economy" meltdown becomes, the smarter Warren Buffett gets? A couple of years ago there were people who actually questioned if Buffett had lost it because he wasn't buying into the hype. Anyone else remember those stories? Jeff Bezos has more money than Buffett! Berkshire-Hathaway's only investment in the internet was their $19.99 check to AOL every month! The New Economy was leaving the Wizard of Wichita behind!

Uh, not really.

There are three things about investing that I know are true:

First: Never borrow money for a depreciating asset. (Like a car-or $100,000 Cisco Routers.)

Second: Bears make money, bulls make money, but pigs get slaughtered. (And you look wonderful with that apple in your mouth, Mr. Lay)

Third, courtesy of Warren Buffett: Investing is like baseball without the called strike. If you don't understand the investment there is no penalty for letting it go by.

This is why the next dollar I lose in this market will be the first. But maybe Buffett isn't so smart after all. As the dotbombs and telbombs go tits up, I have an idea the line of customers at NetJets is going to get a lot shorter.

Brian

erik_kosberg · #4 06-24-2002, 05:07 PM

As of today, it's a penny stock (was at $0.89 per share a few minutes ago). My, how the mighty have fallen.

Should we start an office pool to guess the date when they'll file for bankruptcy?

erik_kosberg · #5 06-25-2002, 10:04 PM

And now their CFO has been fired because of billions in improper accounting:
http://biz.yahoo.com/rb/020625/telecoms_worldcom_3.html

poseidon · #6 06-25-2002, 10:21 PM

In after-hours trading, the stock is down almost 60%... I think that this may be the end of one of the Big Telecoms right now.

Of course, Enron is still trading at $0.11/share... so maybe not.

Oh yeah, Global Crossing is at $0.10/share.

brian_igo · #7 06-26-2002, 07:45 AM

Quote:

Originally posted by erik_kosberg
Should we start an office pool to guess the date when they'll file for bankruptcy?

Is Friday still open?

Brian

brian_igo · #8 06-26-2002, 08:12 AM

I'm trying to have a good attitude about this, because when I'm standing in a soupline a couple of years from now I'll probably need something to laugh at.

Wouldn't you have loved to been a fly on the wall at an Andersen partners meeting a couple of years ago? I know some corporate conferences offer prizes for silly party games or company golf outings. Instead of a $500 hole on the course, they offered a really neat espresso machine to the partner who could get a Fortune 10 company to overstate its earnings the most.

Oh, and gotta love Andersen's defense. Once again, they didn't know what WorldCon was doing with its money. During the trial in Houston, Andersen was saying to anyone who'd listen that the company was going to be destroyed because of the work of a few bad apples. If you can't track billions of dollars in losses that your client is trying to hide, not once but twice, might I suggest that your firm deserves to fail because you are fucking incompetent?

What frightenes me even more than the revelations coming out of ImClone, WorldCom, Enron, and Tyco et al, is the absence of comment and condemnation from those corporate leaders who did not play fast and loose. Where is the leadership in coporate America? Is there any Fortune 50 or 100 CEO who can step up and say "This is wrong, and we need to clean our own house."

With George Walker Hoover in the White House and the accounting industy in possesion of Congress' balls, that kind of leadership from the private sector is all that stands between us and a very steep fall.

Brian

brian_igo · #9 06-26-2002, 10:40 AM

Apparently, the foreign markets just don't have the stomach requiered to digest $3.2 billion in fraud:

Financial Times: Global markets rocked by WorldCom scandal

Of particular note is the fallout this is having on the banking stocks. A rumor that Barclay's might be on the hook to WorldCom for $100 million sent its stock 3.6% lower. A London analyst noted that WorldCom comes atop the losses related to Enron and the ongoing meltdown in South America.

European telecoms took a bloodbath. France Telecom is down over 14%, Deutsche Telecom down over six percent, and Vodaphone down almost five percent.

Brian

scvi · #10 06-26-2002, 05:16 PM

I can say this now without fear of affecting my future employment prospects.

I've had the misfortune of working with many Andersen consultants at many financial institutions in 5 countries. I never met one who had any idea what they were doing and the most junior of them were being charged out at $1,200.00 US a day, plus hotel, plus business class travel. It seemed to me that Andersens had a great racket going. They charged YOU to train THEIR staff - how smart is that?

The only way I could square this kind of pointless waste of money was by reckoning that these were accounts for the boys. The higher up you go the deeper into each others pockets you get.

Sorry about the loss of jobs but they had it coming & the smart ones would have got out long ago.

erik_kosberg · #11 06-26-2002, 05:36 PM

Last night right after the WorldCom news broke, September Nasdaq futures went into a freefall in Asian trading, dropping 4.7%. Today in U.S. trading, the Nas actually went up 0.4%.

I guess that fraud is good for the U.S. market. Maybe we need more of it.

poseidon · #12 06-26-2002, 05:48 PM

Let's keep in mind that some Telecom stocks got the crap knocked out of them today. I'd sure not want to be Qwest, who lost almost 60% of its value today.

They suspended MCIT and WCOM stocks today. I was kinda wondering why MCIT didn't move until I looked at it.

Jeff
who owns 1 entire share of MCIT and won't sell it because it is cheaper for it to go to zero than to pay $9 to trade it... and got the stock for free when I owned WCOM last year.

magenta321 · #13 06-27-2002, 12:38 AM

Grrr. My family had a lot of its money in Tyco and Qwest. Most of it in Tyco. A good deal in Qwest though too.

I'm sick of this. I wish all the companies would just come clean, all at once. Obviously, there aren't any honest companies (even ones my family works for aren't safe!). This sucks. A lot.

**pluckyduck** · #14 06-27-2002, 07:41 AM

There is always so much collateral damage when one of these companies pulls a selfish, stupid stunt like missing 4 billion in expenses.

WorldCom is/was the major account of one of our straight commission sales people. Our company can afford to take the loss of the account and, any open invoices should they not be paid, but can the sales person? This high finance fraud shit comes down to the little guy's mortgage payments in the end.

I miss the moral distinction between WorldCom, Enron and organized crime.

Andrea

poseidon · #15 06-27-2002, 10:39 AM

Quote:

Originally posted by magenta321
Obviously, there aren't any honest companies (even ones my family works for aren't safe!). This sucks. A lot.

This is kind of like saying there are no honest insurance adjustors, no honest car dealers, and no honest politicians. What you're seeing is a lot of crap being sifted out of the mix... but I assure you that there are plenty of honest insurance adjustors, plenty of honest car dealers, a few (

) honest politicians and plenty of honest companies out there.

brian_igo · #16 06-27-2002, 02:36 PM

Quote:

Originally posted by poseidon

This is kind of like saying there are no honest insurance adjustors, no honest car dealers, and no honest politicians. What you're seeing is a lot of crap being sifted out of the mix... but I assure you that there are plenty of honest insurance adjustors, plenty of honest car dealers, a few () honest politicians and plenty of honest companies out there.

The problem is, Jeff, that while I agree with you, right now our shared belief is despite all evidence to the contrary when we are looking at the nation's business leaders.

Most people work for small businesses, but it is the major players who set the tone for the markets and our economy. Who among the Fortune 50 or 100 can step up and say, "This is what we believed in fifty years ago, it is what we believed in two years ago, and it is what we will believe in fifty years from now." If no one can, and the silence is a damned effective indictment, we are all in serious trouble.

And, by the way, I've yet to meet an honest insurance adjustor...

Brian

poseidon · #17 06-27-2002, 04:50 PM

Quote:

Originally posted by brian_igo

And, by the way, I've yet to meet an honest insurance adjustor...

Brian

Gee thanks.

But the bigger problem is who is making the news. There is rarely any news (I'd say "Never" but every so often we get cutesy-tootsy human interest stories when it's a slow news day about how much a humanitarian some CEO is) about companies doing it right -- why? Because they aren't interesting to the public. The public likes doom-and-gloom stuff (which is why many of them adore global warming theories IMO). They thrive off bad news. We all know bad news sells newspapers -- no one is interested in seeing a headline that says "Acme Roadrunner Traps has honest CFO!"

erik_kosberg · #18 06-29-2002, 01:30 AM

From SatireWire, Supreme Court Rules Earnings Should be Protected as “Art”: Recognition of Pro-Formalist Movement Gets WorldCom, Andersen Off Hook

Quote:

In a surprise decision that exonerates dozens of major companies, the U.S. Supreme Court today ruled that corporate earnings statements should be protected as works of art, as they "create something from nothing."

miselainis · #19 06-29-2002, 01:57 AM

Looks like Xerox may be next....

More improper accounting practices where those came from....