Robbie Stephens Cuts WorldCom Rating
WorldCom (WCOM ) found about $3.852 billion in transfers from line cost expenses to capital accounts that violated generally accepted accounting principles (GAAP). Robertson Stephens cut its investment rating on the shares to market underperform from strong buy.
Analyst Jim Friedland says he previously held a positive view on the stock given his belief that WorldCom would not run into a liquidity crisis due to significant cost cutting and the likelihood of its securing additional short-term financing. However, these assumptions were based on falsely reported numbers, says Friedland. Based on today's revelations, he thinks a bankruptcy filing is highly likely within the next 12 months. He removed financial estimates on WorldCom until visibility returns.