WorldCom shares tumble on result

NEW YORK (CNN/Money) -- WorldCom shares tumbled after hours Tuesday after the telecommunications company restated financial results by as much as $3.8 billion, a move that could speed a filing for bankruptcy.

It has fired its chief financial officer, Scott Sullivan.

WorldCom, a former success story of the 1990s whose share once traded above $64, tumbled 56 cents, or 62 percent, to 32 cents in after-hours trading.

The company said an internal audit showed that transfers of $3.055 billion for 2001 and $797 million for first quarter 2002 were not made in accordance with generally accepted accounting principles.

WorldCom said restating these improper transfers would cut earnings by $6.339 billion for 2001 and $1.368 billion for first quarter 2002.

The statement followed reports of massive financial fraud.

WorldCom said it will cut 17,000 jobs by Friday, part of a plan to save $2 billion as the company struggles to survive.

In a statement released after the market closed, WorldCom said it has terminated chief financial officer Scott Sullivan and has accepted the resignation of David Myers, senior vice president and controller.

"Our senior management team is shocked by these discoveries," said WorldCom CEO John Sidgmore, appointed in April. "We are committed to operating WorldCom in accordance with the highest ethical standards."

Sidgmore said the company remains "viable and committed to a long-term future."

Faces delisting

The development comes during a tough patch for WorldCom, which could face Nasdaq delisting if share remain below $1.

With a market capitalization that has tumbled to $2.7 billion, WorldCom's heavy losses Wednesday won't have the same effect on the stock market that they once did.

But the news of alleged accounting misdeeds may only unnerve investors leery about the accuracy of corporate profits in the aftermath of Enron's bankruptcy.

WorldCom stock began falling in late 1999 as businesses slashed spending on telecommunications. A series of downgrades this year have raised borrowing costs for WorldCom, which is struggling with about $32 billion in debt.

Former Chief Executive Bernie Ebbers resigned earlier this year amid questions about $366 million in personal loans from the company and a federal probe of its accounting practices.