TESTIMONY AGAINST EBBERS

The former finance chief of World-Com testified yesterday that he warned the CEO, Bernard Ebbers, at a 2001 dinner meeting that accountants would have to classify expenses as assets to meet Wall Street expectations.

Scott Sullivan told jurors at Ebbers’s fraud trial that he made the suggestion at a Washington, D.C., steak house in March 2001 and told Ebbers “that it wasn’t right, that it was a shortcut to earnings.”

“Did Mr. Ebbers tell you not to make the shortcut adjustment that you had proposed?” federal prosecutor William Johnson asked Sullivan.

“No, he did not,” Mr. Sullivan answered. He said Mr. Ebbers responded by saying WorldCom had to get its revenue going again.

Shortly thereafter, WorldCom accountants covered up more than $700 million in expenses for the first quarter of 2001 by classifying them as capital expenditures, treating regular operating expenses as long-term investments in the network. Such investments raise the value of a company’s assets and the expense is deducted over time as the asset ages.

WAL-MART TO FIRE WORKERS

Wal-Mart Stores plans to close its first unionized store in North America and fire 190 workers after it failed to reach a contract with workers in Jonquiere, Quebec.

Wal-Mart, the world’s largest retailer, objected to some of the United Food & Commercial Workers’ demands, such as increasing staffing, because costs would rise, a spokesman, Andrew Pelletier, said in an interview.

The Jonquiere store and another in St. Hyacinthe, Quebec, were the first Wal-Mart stores to unionize in North America. Keeping expenses low has enabled Wal-Mart to trim prices and compete against rivals such as Target Corp., said investors including David Abella.

PROFIT-TAKING HITS STOCKS

Stocks sagged yesterday in a bout of profit-taking, but blue chips fared better than they might have otherwise as shares of Dow component Hewlett-Packard Company surged following the ouster of CEO Carleton Fiorina.

The robust performance of HP shares gave the Dow Jones industrial average a bit of a lift, but it was not enough to keep the index in positive territory. Oil prices were volatile as government inventory data showed lower-than-expected fuel supplies, and Treasuries rallied. Analysts were not overly alarmed by the day’s trading, however, saying some pullback in stocks was to be expected following the market’s advance last week.

The Dow fell 60.52, or 0.56 percent, to 10,664.11.

The broader gauges were also lower. The Standard & Poor’s 500 index declined 10.31, or 0.86 percent, to 1,191.99. The Nasdaq composite index skidded 34.13, or 1.64 percent, at 2,052.55.

– Associated Press