<

OPINION: Time is Running Out for WorldCom
Friday, February 01, 2002
By Christopher Byron
MSNBC Contributor

Sooner or later, company will almost certainly face liquidation

There’s been a lot of talk lately that the economy has turned the corner and that it will be pulling into the passing lane by spring. That may be true, but it is hard to see how we’re really going to enjoy much more than a sub-par recovery until the last of the excesses are worked off the telecom space, and net new business spending can begin again.

In that sense, the crumbling stock prices throughout the telecom sector are actually good news. They show that investors are waking up to reality, and that instead of valuing this sector on the basis of its earnings capacity, they are now beginning to view the space as essentially a write-off, and are increasingly pricing the stocks in it on the basis of little more than the meltdown value of their balance sheets.

That’s something to bear in mind when WorldCom, Inc., the Clinton, Miss. communications conglomerate, releases its quarterly and full year earnings numbers next week. More than 20 Wall Street analysts follow the stock, and they’re looking for a 26-percent decline in fourth-quarter earnings, to 18 cents per share. But they’re not looking at what the market as a whole is looking at: a business that simply can’t turn a profit on a cash-flow basis, and will sooner or later almost certainly face liquidation.
(More: MSNBC.com News Source)
2002 © MSNBC.

Dan