JUNE 27, 2002
The fallout of the Worldcom debacle
A number of the high technology companies involved in Grand Prix racing have been hit by the knock-on effects of the current Worldcom scandal. The giant US American telecommunications company is now on the verge of bankruptcy following the news that the company's accounting practices appear to have been fraudulent with $3.8bn of overstated cash flow being included in the books in the course of the last year and a quarter. The news sent the Worldcom share price tumbling and undermined the confidence of the entire telecoms industry and the in the stock market in general. The US government has promised a full investigation into what has happened but the big problem will be to keep investors in the markets because faith in accounting practices has reached rock bottom after the Enron and Tyco disasters in recent months. Worldcom is not expected to survive while companies such as Vodafone, Cisco, Lucent, Siemens and other telecom related business took big hits on the stock exchanges as the markets dipped to levels not seen since the immediate aftermath of the September 11 attacks on New York and Washington last year.
The latest problems are bad news for F1 marketing departments as they try to sort out the budgets for their teams for the 2003 season. Times are hard although we may not see the fallout in F1 circles until the end of the current racing season in October.
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