Feng Yu called Kirilenko and Fu Rongqi to short-sell WorldCom's stocks.
When Ralph uses Business Week to expose WorldCom's false accounting scandal, WorldCom will be completely ruined, just like Enron.
Three days later, a new issue of Business Week was released.
The CEO of a certain Wall Street investment institution was sitting in his chair after work, as he did every day, grabbing new business newspapers and magazines to learn about the latest business information.
He suddenly saw an Asian on the cover of "Business Weekly".
This gave him great interest, so he opened this issue of "Business Week" first, which saved him from huge losses.
Oh, this is Masao Kameda, the president of Fengyu Holdings Group. Fengyu Holdings Group, isn't it said to be Feng's company? Hey, Kameda Masao is the first person at the helm of a company to go public. He is really a genius for being able to run that kind of company and go public.
Wait, what did you say at the end? Kameda Masao said that WorldCom's accounts were falsified
He quickly flipped back, and there was indeed an article proving WorldCom's fraud. The data above clearly showed that WorldCom had at least $4 billion in problems with its accounts, and that was $4 billion!
He immediately grabbed the phone on the table: "Sell all the WorldCom stocks. No matter how much the loss is, immediately, immediately!"
At the same time, many people who got the news were also selling WorldCom's stocks. Thinking about Enron's mistakes, why not wait for WorldCom to turn around? Then just wait until WorldCom's stock becomes useless paper!
The U.S. securities regulator has actually noticed that WorldCom's debt ratio is too high. The legend of the small fish eating the big fish has been staged time and time again, relying on loans and the issuance of new shares. Now it is no longer a small horse-drawn cart, but a small horse-drawn train!
Today they also noticed the article published in Business Week, which said that WorldCom provided a huge loan of US$366 million to its CEO Eberth, but Eberth had no collateral. There was obviously something wrong with this loan. It was Eberth's personal enrichment.
At the end of last year and the beginning of this year, WorldCom's large amount of engineering expenses for expanding its telecommunications system were not recorded as normal costs. Instead, they were treated as capital expenditures. Such an accounting skill brought nearly 3 billion US dollars to WorldCom. huge profits.
The profits of nearly one billion US dollars last year and about US$300 million in the first quarter of this year were also fictitious. They actually lost a lot.
Not to mention anything else, the large amount of loans they need to repay in interest every day is not a small amount, not to mention that their operations are mediocre, so where does the profit come from
If they really make a profit, will they again apply for a loan of US$2.5 billion from 25 banks
If another magazine broke the news, others would still wonder if there was something wrong with it? But if it was revealed by Business Week, everyone would instinctively believe it.
What's more, that one piece of evidence is not evidence: WorldCom's auditing company, like Enron, is Andrei.
In short, these two false accounting scandals brought almost disaster to Anxinda. They were the world's top auditing companies before, but now, no one dares to hire them.
If Anxinda was hired, wouldn't others suspect that their company also made false accounts? Even if you prove it, others may not believe it.
The day after the scandal broke in Business Week, the U.S. Securities and Exchange Commission announced an investigation into WorldCom's past mergers and also investigated the company's $366 million loan to Eberth.
And they immediately sued WorldCom for civil fraud. Those false accounting matters need to be investigated in detail. Maybe there is more to it than that.
And Xiaobu Shi, who is visiting abroad, is furious. This is the world's largest Internet provider and the second largest long-distance phone company in the United States. It has developed through fraud. So what will others think of the United States
As soon as he took office, the Internet bubble broke out, causing the United States' economic recession and itself to be in dire straits. As a result, the good economy of the previous term was completely an illusion, created by companies that didn’t know what they were talking about.
If it weren't for companies like Enron and WorldCom, would the Internet have such a big bubble? Is he so embarrassed now? In order to develop the economy, he is looking for cooperation from various countries. This president is so frustrated!
WorldCom's credit rating was quickly adjusted to the lowest level. This level is considered a loan. It has already indicated that this company is going to be finished!
At the same time, 25 banks that originally planned to lend $2.5 billion to WorldCom also jointly accused WorldCom of fraud. Even the banks that had not recovered some of their previous loans also joined in, believing that WorldCom had borrowed money through Inflated profits to defraud them of loans.
WorldCom's stock price plunged faster than Enron's. It also shows that investors are already very concerned about things like falsifying accounts.
Within a few days, several auditing companies investigated and discovered that WorldCom had two more wrong accounts. Kameda Masao’s previous evidence was all proven to be true. WorldCom’s accounting problems had increased to Close to eight billion dollars!
WorldCom's stock price plummeted rapidly. From US$70 billion some time ago, it has shrunk to US$20 billion, and it is still falling rapidly.
Everyone formed a concentrated selling, and many people couldn't sell their stocks at all, but WorldCom's stock price continued to fall because of this.
WorldCom quickly replaced a new CEO, but it didn't help. Although the new CEO claimed that they had negotiated and obtained approximately US$2 billion in financing and would continue to provide high-quality services to customers, no one believed it at all.
The decision on the penalties faced by WorldCom has not been announced yet, and WorldCom's stock price has been falling again, and has already fallen below the issue price.
Even lower than the real value of WorldCom. After all, WorldCom still has a lot of fixed assets. The value of these assets is worth more than 20 billion US dollars. Unfortunately, WorldCom also has higher liabilities. These fixed assets are Not enough to cover debts.
As a result, WorldCom filed for bankruptcy protection faster than Enron.
Feng Yu and the others promptly bought WorldCom's stocks and closed their positions. This time, they made another small profit. If WorldCom's debt ratio hadn't been too high, they would have earned more.
This time, Kameda Masao, Ralph and others also made a fortune. At the same time, some shareholders of "Business Weekly" also made a fortune. It was their participation that prevented Feng Yu and the others from short selling WorldCom stocks.
But it didn't matter, "Business Weekly" sent an invitation to Feng Yu, inviting Feng Yu to become its independent director, and even promised to sell part of the equity to Feng Yu.
To put it bluntly, those shareholders all want to have a relationship with Feng Yu, hoping that next time there is such a profitable business, Feng Yu can take them with him!
What Feng Yu didn't expect was that the scope of the scandal of false accounting began to increase.
… (To be continued.)