STOCKWATCH: PCCW sharply lower on goodwill write-off, heavy 2000 loss

HONG KONG (AFX-ASIA) - Pacific Century CyberWorks Ltd shares were sharply lower in midmorning trade with the company's large 2000 net loss and its move to to write off 22 bln usd in goodwill from reserves sparking very heavy selling in the stock, dealers said.    The write-off resulted in the company's shareholders equity becoming negative, which dealers said effectively drove the nominal value of the stock below its par value and into negative territory.    The stock briefly fell below 3.00 hkd but for the time being appears to be holding around the level, they said.    At 10:55 am, PCCW was down 0.40 hkd or 11.51 pct at 3.075 hkd, off a low of 2.975 and a high of 3.35, on volume of 62.98 mln shares.    The Hang Seng Index was down 264.60 points12,586.81.    PCCW yesterday reported a larger than expected net loss of 886 mln usd or 6.907 bln hkd for 2000, mainly on the back of a 627 mln usd or 4.887 bln hkd provision for net unrealized losses on investments.    It also decided to write off against reserves the 22 bln usd or 172 bln hkd in goodwill related to the acquisition of Cable & Wireless HKT last year.    Louis Tse, executive director with Standard Capital Brokerage, said the very substantial write-off against reserves resulted in negative shareholders equity and therefore a negative nominal value for PCCW shares.    "The write-offs have sent the stock to a value of around negative 1.95 hkd per share. It doesn't make any sense to buy the share at its current price of over 3.00 hkd now," he said.    "Also, the company has little prospect of profitability in the foreseeable future," he added.     Tse said it was "not appropriate" for the company to write off the goodwill from reserves, as the reserves are effectively theassets of HKT.    "PCCW has just merged with HKT, and the reserves are the assets of HKT. It would have been more appropriate for PCCW to book the goodwill write-offs from its profit and loss account," he said.    Tse said the investors that bought PCCW shares at the time of the HKT takeover may not have been prepared for the goodwill write-offs, though the amount of goodwill was known at the time of the HKT acquisition.    "Yesterday was judgement day for PCCW," he said.    He said no one can tell where PCCW shares may find support, given their negative nominal value.	    more    

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