- Top 10 Recession-Proof IT Jobs
- 7 Hot IT Jobs That Will Land You a Higher Salary
- Link Building Strategies and Tips for 2014
- Top 10 Accessories for Your iPad Air
IDG News Service - WorldCom Thursday announced it has written off $79.8 billion in goodwill and other assets as the telecommunications company struggles to recover from the largest bankruptcy in U.S. history.
The previous $45 billion value related to WorldCom's goodwill was completely written off the company's balance sheet, and the value of its equipment and other intangible assets was reduced from $44.8 billion to $10 billion, WorldCom said in a release.
Goodwill is a dollar amount placed on intangible factors such as the value of a company's reputation and anticipated future earnings, in excess of asset value. Generally accepted accounting principles call for goodwill to be written off over time, but usually on a more gradual schedule.
The $34.8 billion decline in the value of WorldCom's plant, property and equipment assets reflects the overcapacity that has stifled the telecommunications industry over the last two years. WorldCom pursued an acquisition strategy to become a leading carrier of IP traffic around the world, but those acquisitions are no longer worth what the company paid for them.
The write-downs reduce WorldCom's depreciation and amortization expenses to $143 million, down from $480 million. Despite the expense reduction, the Clinton, Mississippi, company posted a net loss from continuing operations before reorganization items of $47 million on revenue of $2.2 billion for the month of December.
WorldCom's huge write-downs come close to AOL Time Warner's record-setting 2002 write-downs of nearly $100 billion.
WorldCom filed for Chapter 11 bankruptcy protection in July of 2002 after it admitted it had overstated its earnings over the last three years by about $7 billion.