Qwest does a WorldCom

NEWS US tech shares are likely to take another hammering when the markets open later today after telecoms company Qwest Communications admitted to improperly booking $1.16bn in sales. The figure relates to sales of its optical network and other communications equipment from 1999 to 2001. It hasn't said when the revised results will be made available. Qwest's newly appointed CEO Dick Notebaert told the Associated Press yesterday: "We would rather it happen sooner than later, and we have a great sense of urgency... [But] we do imagine it will take months and not days." In a statement, the company added: "The amount of the additional revenue adjustments may be significant." On Friday, Qwest's shares closed down almost seven per cent but clawed almost all of this back during after-hours trading. The Denver-based company is already under investigation by the SEC for its accounting practices, alongside data carriers WorldCom and Global Crossing. Stateside regulators are already examining whether the companies produced inflated revenue figures by booking sales in one lump sum rather than over the whole lifetime of the contract.
In addition, data carriers are accused of swapping unused capacity between themselves to give the impression their networks were busier than they actually were. Last week Qwest's former CEO Joseph Nacchio walked out on the company following a year of losses totalling $26.4bn. Qwest has now been forced to put a variety of assets up for sale to dig itself out of its financial quagmire. This includes its QwestDex telephone directory business, reported to be worth $9bn.