This story was written by Keith Dawson for the Media Unspun email newsletter and is Copyright 2002 by Keith Dawson.
M E D I A   U N S P U N
Scenes From a Meltdown

OK, enough happy news, we now return to the usual doom and gloom. As credited in CBS MarketWatch, the Wall Street Journal broke the story yesterday that WorldCom may be mere days from a bankruptcy filing. The New York Times and Reuters joined the Journal today with stories based on no-name informants. (The Journal used variants of the phrase "people familiar with the matter" eight times.) Each story mentioned that such a filing would be the largest in history, dwarfing Enron's, on the basis of the declared value of WorldCom's assets. The Journal reported that analysts question whether the company's holdings are worth anywhere near the $103.8 billion the company claims.

Moving along the bankruptcy pipeline, the Associated Press reported that Congress may investigate claims of Global Crossing shredding documents before and after its Chapter 11 filing in January. The AP story, carried in SFGate and elsewhere, noted the company's assertion that "none of the (shredded) documents was relevant to pending lawsuits or investigations." Uh-huh, just a coincidental shredding party by the aide and the son-in-law of Joseph Perrone, whom the AP identified as Global Crossing's EVP of finance "and a former Arthur Andersen partner."

At the far end of the bankruptcy pipeline was 360networks, which went Chapter 11 last summer and has now filed a plan to emerge. The Seattle Post-Intelligencer noted that the plan turns over control of the fiber-optic net builder to a few secured lenders at the expense of bondholders and stockholders, who stand to lose nearly $1.5 billion. Well, somebody has to pay.

Finally, a report from some quarters of the industry that are not (yet) operating under court protection. The L.A. Times summarized a clutch of earnings reports in the telecom sector. Nokia alone saw healthy profits, which grew by 46%. Nortel reported losses that in most seasons might be characterized as "staggering" -- from $320 million to $700 million, depending on which costs are excluded -- but which were in line with analysts' expectations. Level 3's business continued its precipitous decline, and the L.A. Times noted that Legg Mason Wood Walker rates its stock a "sell." Sprint lost money to the tune of only $63 million in the quarter, and the stocks of its two operating units actually rose a smidge. The report concluded with a Legg Mason analyst's caution: "It's still ugly out there." Meltdowns are like that. - Keith Dawson

WorldCom Nears Chapter 11 Filing As Cash Reserves Continue to Fall,,SB1027021528753675760,00.html

Report: WorldCom bankruptcy imminent (CBS

WorldCom Bankruptcy Filing Is Said to Be Set for Next Week

WorldCom may file bankruptcy next week (Reuters)

Congressional committee examines document destruction at Global
Crossing (SFGate, AP)

360networks plan stiffs bond- and stockholders

360networks' plans turn domestic (Reuters)

Losses Pile Up at Battered Telecom Firms