WorldCom Stock Plunges On Salomon Smith Barney Downgrade

WorldCom

In afternoon trading, WorldCom's stock was trading at 92 cents per share, a 30 percent change from a Friday close of $1.22.

In a research note, Jack Grubman, an analyst with Salomon Smith Barney, cut his estimate for WorldCom's Group's 2002 earnings before interest, taxes, depreciation and amortization (EBITDA) to $6.7 billion from $7 billion. WorldCom's EBITDA forecast is $7 billion to $7.5 billion.

Grubman also said WorldCom's need to recapitalize is more urgent and the carrier may have less long-term access to funds from its credit facilities than previously thought.

This is the latest blow for the carrier, which is under scrutiny for its $30 billion debt load, a 65 percent first-quarter drop in earnings and lower sales, as well as a Securities and Exchange Commission investigation into its accounting practices.

Longstanding CEO Bernard Ebbers was replaced by then-chairman John Sidgmore in April.