Business & Finance
WorldCom Inc. was charged with fraud by the Securities and Exchange Commission in a civil court filing. And the Justice Department, which can bring criminal charges, said it has the Clinton, Miss.-based company under review. Those moves followed the telecommunications giant's admission earlier this week that it hid $3.8 billion in losses from investors over the past five quarters. The Justice Department review carries especially worrisome implications for WorldCom, analysts said. Two weeks ago, acting on federal criminal charges, a jury found the Arthur Andersen accounting firm guilty of obstruction of justice for its role in the Enron collapse; Andersen also audited WorldCom's books. Meanwhile, informed sources said a collapse by WorldCom could be hastened by the refusal of creditor banks in New York, Tokyo, Germany, and the Netherlands already on the hook for $4.5 billion in loans to advance the company any more money.
Tyco International Ltd. will spin off rather than sell its lending division, sources familiar with the situation said. They said the decision was based on the discovery that bidders for the unit, CIT, were prepared to offer no more than Tyco hopes to raise from an initial public offering, $5 billion to $6 billion. The sources said the IPO decision was unrelated to Tyco's numerous legal problems.
A $1.47 billion takeover bid by Roche Group, one of the world's leading makers of pharmaceuticals, was accepted by shareholders in Japanese competitor Chugai Co. The latter will keep its own name and stock-market listing. Roche is based in Basel, Switzerland; Chugai in Tokyo.
In employment news:
Another 7,000 jobs will be cut by Motorola, the struggling electronics giant announced. But despite taking an expected $3.5 billion charge against second-quarter earnings, the company said it likely will post an operating profit for the year. Since August 2000, Motorola has laid off almost one-third of its workforce, or 43,000 people.
Cap Gemini Ernst & Young, the largest information technology group in Europe, said it will lay off 5,500 more employees by next January. But some will be offered alternative positions elsewhere in the company, it said. Paris-based Cap Gemini cut 5,400 jobs last year.
Raytheon scheduled a news conference in Little Rock, Ark., apparently to announce it will add 350 jobs to its aircraft production facility there. Little Rock is the final stop in the assembly of a new midsize business jet the aircraft unit is building at its Wichita, Kans., plant.