But the early morning announcement, led by president Gary Barrow at a 7:30 am briefing, failed to sway the company's stock, which having dipped as low as 69 cents in early trading on the stock exchange, later shrugged off the news and climbed back to its opening price, to hold firm at 80 cents at market close.

Borrow. led the team that announce the loss

Company executives later told the Observer that the $11.06 billion of 'impairments' that pushed C&WJ so deep into the red "does not impact headline profits", as it was a non-cash item on the books.

The company's financials show operating profits of $3.6 billion, and while the figure is more than two billion below the prior year's $6 billion, it actually reflects an improvement in its gross margin of 70 per cent, compared to last year's 67.5 per cent.

But the impairment item had significant consequences for the company's balance sheet position, stripping down its net assets by $9.6 billion to $28.5 billion.

Andrew Cherry, senior vice president of finance, later told the Observer that the new accounting standards require continuous assessment of C&WJ's impairments and while the company considers that a charge of similar magnitude was unlikely to recur in the near future, he would not give the assurance that it would not.

A company incurs impairment charges where it estimates that the cash earnings from an asset are less than the asset's book value.

C&WJ estimates that it will be earning less revenue from its fixed lines and the TDMA side of its mobile network, and has adjusted the value of the assets accordingly.

"An aggressive assumption going forward is that we will for strategic reasons migrate customers to the GSM network," Cherry told the Observer.

The company now has some 100,000 GSM customers from a mobile customer base of more than 600,000. The total switch over of customers will be done over a three-year period, he said.

C&WJ meantime, still grappling with competition, especially in the mobile market, continues to rationalise aspects of its operations. It paid out $1.1 billion in redundancies last year and reduced its motor vehicle fleet and property holdings, with plans to sell off more of the land it owns.

The company also owes its parent almost $6 billion, but Cherry said the parent has deferred the payments so that C&WJ can reinvest the monies locally.

"In effect, it's an interest-free loan," he said.
Asked about projected increases in earnings, Cherry said the company does not give projections, but believes its revenues have stabilised for now. However anticipated growth areas include data and mobile.

http://www.jamaicaobserver.com/magazines/Business/html/20040602T230000-0500_60705_OBS_C_WJ_POSTS____BILLION_LOSS.asp