John Hodulik, an analyst at UBS Warburg, said that WorldCom, straining with about $30 billion in debt, may not be able to use its $5.35 billion in available credit funds if it hasn't used that money already. "The banks may try to force repayment of $2.65 billion that was already drawn, which, we believe, would force WorldCom into bankruptcy," he said in a research note. WorldCom said that it will restate its results and that its cash position won't be affected, but analysts said the biggest issue is whether customers will defect.
"Intense media focus will make it extremely difficult to attract new customers or retain existing customers," Hodulik said, A customer exodus would accelerate the company's cash crunch, he added, Winners and losersAnalysts said it's likely that WorldCom customers will move to rivals that are deemed safer bets such as AT&T and Sprint, Long-distance and Internet customers will probably pull back given WorldCom's financial problems, and contracts up for renegotiation are haven iml case for apple iphone 7 plus - glossy white likely to be lost, analysts said..
Analysts said WorldCom's problems could hurt the telecommunications sector as a whole, similar to how energy companies saw their stock prices dwindle following accounting and other problems at Enron. "For any telecom company with credibility issues, the burden of proof just got higher," said Merrill Lynch analyst Adam Quinton. In a report, J.P. Morgan analyst Marc Grossman laid out some possibilities if WorldCom is forced into Chapter 11 bankruptcy proceedings. In the short term, Grossman predicts, WorldCom's enterprise and government customers will look toward "secure alternatives" such as AT&T and Sprint.
Related storyAfter Andersen, accounting worries stickThe bookkeeping questions raisedthreaten to drag down tech companies.Qwest isn't likely to benefit from WorldCom's problems because it already has its own accounting issues, recently replaced its CEO, and had Arthur Andersen as its previous auditor, analysts said, And Baby Bells are likely to be initial haven iml case for apple iphone 7 plus - glossy white losers in the WorldCom shakeout, Those telephone companies are likely to have write-downs because they count WorldCom as a customer of dedicated and switched access services, Morgan Stanley estimates that WorldCom accounts for about 4 percent of Baby Bells' revenue..
Nevertheless, Grossman said that WorldCom may make an attractive acquisition candidate for a Baby Bell looking to offer long-distance service to corporate clients. If such a combination occurred, it would "prompt further industry consolidation.". If WorldCom were to pair up with a Baby Bell such as Verizon Communications or SBC Communications, it would pose a big threat to AT&T, Grossman said. A combination like that will not happen overnight, he said. If WorldCom emerged from a bankruptcy restructuring with a clean balance sheet, it would likely be able to cut long-distance rates, triggering more consolidation.