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June 26, 2002 16:20 PM UTC
WorldCom disclosed late Tuesday that it had improperly accounted for almost $4 billion, puffing up its financial results for the last five quarters. The revelation rattled the telecommunications sector as many analysts noted that the company will have a tough time surviving.
The news further soured investor confidence after such once high-flying companies as energy trading company Enron Corp., telecom giant Global Crossing and conglomerate Tyco International crashed on a lack of accounting transparency.
Trading in WorldCom shares, which peaked at more than $64 in 1999, was halted after they lost nearly all of their remaining value in pre-market trade, plunging to 9 cents a share.
Tokyo's Nikkei stock average tumbled 4 percent to close at a four-month low, and the pan-European FTSE Eurotop 300 index was off by a similar amount about 1 1/2 hours ahead of Wall Street's opening bell. US stock indices fell on the opening bell, with the tech-heavy Nasdaq falling 3.2 percent to 1378.74, and the Dow Jones industrial averaging tumbling 2 percent to 8947.61.
'WorldCom becomes telecom's Enron,' said RBC Capital analyst John Wilson.