At Global Crossing, it is same old same old


They say, however hard you may try it is nearly impossible to straighten a dog’s tail. Well same is the case for Global Crossing, which is one again stinking up the telecom waters, and there is whiff of another scandal in the making.

bq. Global Crossing Ltd. expects to restate its 2003 financial results after determining it underestimated its accrued cost-of-access liability by roughly $50 million to $80 million in the year. The company’s accrued cost-of-access liability as of Dec. 31 was $150 million, while its cost-of-access operating expenses during 2003 were $1.9 billion. The expected adjustment of its accrued cost-of-access liability will be recorded as a noncash charge. As a result of the review, Global Crossing said it is postponing its June shareholders meeting. The company also said the review could jeopardize the financing it had anticipated securing by June 30.

The Wall Street Journal reports:

bq. “The bottom line is that we believe today’s news of the accounting restatement is a major blow to management’s credibility with investors,” wrote Jefferies & Co. analyst Romeo Reyes in a research note. “Even worse, in our opinion, is that it will make it extremely difficult for Global Crossing to complete the necessary financing to plug the 2004 funding gap, which we now believe is north of $200 million.”

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