- The Washington Times - Tuesday, February 5, 2002

NEW YORK (AP) New questions about accounting practices at Enron Corp. and Tyco International provoked a broad sell-off on Wall Street yesterday as investors grew more doubtful about the honesty of corporate bookkeeping in general. The Dow Jones Industrial Average tumbled more than 200 points in a decline that accelerated late in the session.
Analysts said investors were concerned that other companies might have used the same kind of accounting methods as Enron and Tyco. Amid weak corporate earnings forecasts and concerns that prices are already too high, the news made stocks even less appealing.
"There's no trust out there right now. It's a question of which stock do you have in your portfolio that could be the next problem so why be invested?" said Barry Hyman, chief investment strategist at Ehrenkrantz King Nussbaum.
The Dow closed down 220 points, or 2.2 percent, to 9,687, giving back much of the rebound last week that followed a similar drop on worries about Tyco and Enron.
Broader stock indicators also fell, with technology issues particularly hard hit. The Nasdaq Composite Index lost 56, or 2.9 percent, to 1,856. The Standard & Poor's 500 index was off 27.8, or 2.5 percent, at 1,094.
The sell-off extended what so far has been a disappointing year on Wall Street, with investors concerned about the economy and worried that the problems that brought Enron down are not isolated. Investors are growing skeptical about the accuracy of corporate reports and bookkeeping in general and fear that more companies are in worse shape than their results suggest.
A report by three Enron board members that said the company deliberately misrepresented its financial condition worsened Wall Street's mood, as did former Chairman Kenneth L. Lay's decision not to testify before a congressional committee. A Senate panel was expected to decide today whether to issue a subpoena.
Tyco tumbled $6.96, or 19 percent, to $29.90 on a Wall Street Journal report that it spent about $8 billion in the past three fiscal years on more than 700 acquisitions that were never announced to the public. Standard & Poor's and Fitch also downgraded some of their ratings of Tyco debt and expressed concerns about the company. The company denied that its bookkeeping practices were improper.
Investors also sent Williams Cos. down $2.64, or 14 percent, to $16.36 after the company said it is prepared to sell more assets and issue more stock to keep its credit rating.
In the last week or so, questions have been raised about Williams' obligations to its former telecom subsidiary, the Williams Communication Group, which is facing financial problems. Williams Communications lost 42 cents to $1.
The selling spread to other telecommunications companies, including AT&T; Wireless, which fell 94 cents to $10.12. Its former parent company, AT&T;, fell $1.03 to $16.30.
Among tech issues, Ciena dropped $1.88 to $10.12 on concerns the optical-networking industry will take time to recover.
The sector is considered to be overpriced by some, making it more vulnerable to selling when investors are worried about future returns.
"I think it's become more of a 'Sell now, ask questions later' market until people feel more confident about earnings," said Tom Galvin, chief investment officer at Credit Suisse First Boston.
Declining issues led advancers more than 2 to 1 on the New York Stock Exchange. Consolidated volume came to 1.78 billion shares, more than the 1.67 billion reported Friday.
The Russell 2000 index lost 9.95 to 470.09.
Overseas, Japan's Nikkei stock average lost 1.6 percent. In Europe, Germany's DAX index slid 2.2 percent, Britain's FT-SE 100 dropped 0.4 percent and France's CAC-40 fell 1.3 percent.

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