Several Australian businesses associated with global communications giant WorldCom have been rocked by the news that the company has found a multibillion-dollar black hole in its books and is firing 20 per cent of its worldwide staff.
In Australia, WorldCom runs a datacentre business and one of the country's largest IPSs, OzEmail.
WorldCom inflated financial results by more than $A6.5 billion in reporting profits for 2001 and the first quarter of 2002, when it was in fact producing huge losses. The company will now restate its financial results for the last five quarters as well as immediately cutting 20 per cent of its staff or about 17,000 employees.
In response to the news, WorldCom immediately fired its chief financial officer, Scott Sullivan. Meanwhile, senior vice president David Myers resigned.
This has sparked concern among OzEmail users as to whether services will be continuing uninterrupted. An spokesperson said that under the circumstances, OzEmail was unable to comment.
Despite the shock announcement, WorldCom president and CEO John Sidgemore has attempted to reassure customers and employees that the company remains viable and committed to a long-term future. "Our services are in no way affected by this matter, and our dedication to meeting customer needs remains unwavering," he said.
The Australian market shed 1.5 per cent after being one of the first to trade after the report broke. Telcos were the worst affected.n