Updated from 9:37 a.m. EST

Shares of

Williams Cos.

(WMB) - Get Report

plunged Tuesday after the energy trader estimated that fourth-quarter earnings would fall below analysts' estimates and delayed the release of a full earnings statement.

Williams Cos. postponed a complete earnings release for 2001 saying it is assessing financial obligations to telecommunications provider

Williams Communications

(WCG) - Get Report

, 95% of which it spun off in April of 2001.

The stock closed in regular trading at $18.78, off $5.36, or 22.20%

Williams Communications has $1.4 billion in debt and a network lease agreement covering assets that cost $750 million. Williams Cos. is responsible for paying it off if the subsidiary can't.

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Onto Books

According to Williams Cos. spokesman Jim Gipson, the issue is one of proper accounting rather than imminent liability.

"We're evaluating whether we need to recognize (the $1.4 billion of ) debt into our books," he said. "It had been a footnote but the rating agencies are now saying we need to consider that as debt."

Williams estimated that it would report recurring earnings, excluding items, of 34 cents a share in the fourth quarter, below the 89-cent profit posted last year and analysts' estimates for 39 cents. The company estimates that earnings from continuing operations will be 13 cents a share compared to 80 cents last year.

The company expects 2001 earnings per share, excluding items but including 12 cents of costs related to its credit exposure to

Enron

( ENRNQ), of $2.35, and reaffirmed that it is looking for earnings of between $2.65 and $2.75 per share in 2002.

Any financial impact from the firm's debt obligation would probably be classified as discontinued operations in the final 2001 consolidated income statement.

"We have seen changes in the industry, we've seen (the) Global Crossing (bankruptcy), we're engaged in discussions (with investment banks) to eliminate triggers," said CEO Steve Malcolm in a conference call.

Williams Cos. is trying to eliminate triggers that require it to pay off debt if its stock price or credit rating fall below certain levels, although Malcolm said that rating agencies have given no indication that they intend to downgrade the firm's debt. Removing triggers would require consent from bond holders, he added.

New Money

Back in December, Fitch, Standard & Poor's and Moody's Investors Service all reaffirmed the company's investment-grade ratings. Energy traders have taken a number of measures to shore up their balance sheets in the wake of Enron's collapse and protect their credit ratings.

Earlier this month, Williams raised $1 billion from a sale of securities convertible into stock. The company also said in December that it would sell noncore assets and reduce capital expenditures.

During the conference call, several analysts asked questions about the firm's "mark-to-market" accounting, which is standard practice for energy trading firms. This procedure allows companies to book as a profit the full value of a multiyear contract at the time it is announced, rather than over time as the profits are actually realized. A spokesman said 60% of the profits at the firm's energy trading and marketing business come from mark-to-market deals.