WorldCom to Write Down $80 Billion

WorldCom Inc., the telephone company that filed for bankruptcy protection after a $9-billion accounting scandal, said Thursday that it would write down $79.8 billion in assets after waning demand reduced the value of its networks.

The write-downs include all of the company’s $45 billion of goodwill, the difference between an asset’s purchase price and its fair value. WorldCom also is reducing the value of property, plant and equipment and other assets to $10 billion from $44.8 billion, it said.

The company had said it might write down assets, including all goodwill. Former Chief Executive Bernard J. Ebbers built the company into the No. 2 U.S. long-distance carrier through more than 60 acquisitions. He resigned under pressure last April, three months before the company filed for Chapter 11 bankruptcy protection. WorldCom has said its accounting misstatements may exceed $9 billion.

It is the second-biggest asset write-down in U.S. corporate history, after AOL Time Warner Inc. reduced the value of its assets by $99.7 billion last year.

Clinton, Miss.-based WorldCom also said it had a net loss from continuing operations before reorganization items of $47 million in December, on sales of $2.2 billion. It didn’t give a monthly net loss figure. WorldCom reports results each month to the U.S. Bankruptcy Court in New York.

The loss doesn’t include WorldCom’s Embratel Participacoes Brazilian unit.

The company said it increased its cash by $200 million in December, ending the month with $2.5 billion.

WorldCom’s rivals have said they are winning market share as customers pare their business with WorldCom.

AT&T; Corp., the No. 1 U.S. long-distance telephone company, said it had won about $1.7 billion in contracts over the last seven months. Meanwhile, Sprint Corp., the No. 4 U.S. long-distance company, has said it won about $400 million in contracts from about 200 corporate customers since May 2002.

WorldCom met with creditors this week to outline its business strategy and priorities for the next three years.

Details of its business plan were not disclosed, but the company must file a reorganization plan with the Bankruptcy Court by April 15. It aims to emerge from bankruptcy protection by midyear.

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Bloomberg News and Reuters were used in compiling this report.