WorldCom: Who knew what? And when?

Bad news for world stock markets - yes. Worse news for telecoms - not necessarily...

Bad news for world stock markets - yes. Worse news for telecoms - not necessarily...

"We don't have to win any race. We just have to be the last one standing." Oh how those words must hurt now. It was a senior vice president of a major telecoms company, trying to stay alive. Guess which one. What a difference a fortnight makes. It was Lucy Woods who said that, EMEA boss of a telecoms company called WorldCom, which is now expected to file for bankruptcy in a matter of days. Did she know there were storm clouds on the horizon? We haven't been able to get in touch with her since, so it's difficult to be sure. But one would have to say probably not. We knew that the company was under investigation by the Securities and Exchange Commission but it's difficult to believe that anyone would do a press tour if they knew the business was going belly up before the end of the month. We hope it was just a small team in the company's finance department that was responsible for this. It's difficult to believe their auditors didn't know but we can't be sure. Since it's the accountants who are responsible, it's perhaps fitting that the impact of this news is likely to be felt harder in the accountancy business than the telecoms sector. Whatever the scope of their culpability, it's surely a death blow to WorldCom's auditor, Andersen, which is reeling after its involvement in the Enron scandal. Ultimately, the news won't sink the telecoms sector - it's so heavily under the cosh from the markets already that the WorldCom news has had surprisingly little impact. In fact, some of WorldCom's rivals actually saw their share prices rise on the news. The markets have recognised some of these companies are in line to pick up WorldCom customers, and benefit from long-term price rises in a less competitive sector.