Global Crossing Faces Delisting

The setback comes just a week after a series of accounting shocks from the telecom firm.
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Global Crossing

(GLBCE)

hired auditors to re-examine its books, and added that the Nasdaq may delist its faltering shares.

The news comes the week after the telecom network operator said it would be forced to restate past earnings. The restatement news shocked Wall Street, coming just five months after Global Crossing emerged from Chapter 11 protection. The company's stock lost more than half its value in the span of a week. On Monday, Global Crossing rose 15 cents to close at $7.30.

The Florham Park, N.J., company said it hired Deloitte & Touche to review its books and some procedures, and engaged Grant & Thornton to review whether it could reissue audits that the firm said last week it would withdraw.

Last Thursday, Grant Thornton withdrew its audit reports for the past three quarters, saying the firm "cannot continue to be associated with" Global Crossing's financial statements.

Grant Thornton was replaced by Ernst & Young on April 1 after it reported some concerns about the company's methods. Grant Thornton had raised questions about what it called "significant deficiencies" that, in the aggregate, constituted "material weaknesses" in Global Crossing's accounting.

Last Tuesday, Global Crossing said it would have to restate its 2003 financial results because it underestimated access costs. Those include expenses like the fees Global Crossing owes other phone companies that handle its traffic.

The company says its own preliminary review uncovered between $50 million and $80 million in understated access liabilities in 2003. Access costs are the largest expenses for the company, totaling $2 billion last year.

Due to the discovery, Global Crossing says its previous financial outlook for 2004 is no longer valid and that it is also reviewing the books for 2002.