CHICAGO (AP) _ Arthur Andersen's felony conviction for obstructing justice signals the end of the once-mighty accounting firm, industry analysts predicted Saturday.
While Andersen has maintained for months it can stay in business as a smaller firm, most experts think the 89-year-old company was mortally wounded even before its federal trial began on a charge of shredding Enron-related documents.
``I already thought it was dead. But perhaps for those who were in doubt, this is it,'' said Arthur Bowman, editor of Bowman's Accounting Report. ``It was on life support, but maybe today they pulled the plug.''
Andersen, the smallest of the Big Five auditing firms, has lost millions of dollars in revenue and hundreds of publicly traded clients, including United Airlines, Merck & Co., Aquila Inc., Costco Cos. and UnitedHealth Group. The exodus sped up after the indictment was unsealed March 14.
The company months ago announced plans to lay off 7,000 employees, and it has been hit by a barrage of lawsuits by Enron shareholders and creditors.
Outside the Houston courthouse, Andersen partner C.E. Andrews said the company will not immediately be shut down. He said it was too early to talk about the future of the company.
``We don't have to rush out today and close our offices. Don't expect that,'' Andrews said after the jury issued its verdict. ``We will assess the outcome of this and make our decision.''
Defense attorney Rusty Hardin promised to appeal and vowed a legal fight if state accounting boards take steps to strip Andersen of its business licenses around the country.
The firm was founded in Chicago in 1913 as Andersen, DeLany & Co. by 28-year-old Arthur Andersen, who taught accounting at Northwestern University, and fellow accountant Clarence DeLany. Early clients included ITT and Palmolive.
When DeLany left in 1918, it was renamed Arthur Andersen & Co. and run by Andersen as managing partner until his death in 1947. It was considered the gold standard of the accounting business for years, and became the world's largest professional services firm in 1979.
But after separating its accounting and consulting practices in 1989, Andersen was involved in a series of accounting scandals involving clients Waste Management, Sunbeam and, finally, Enron.
As of Friday, Andersen has lost 785 publicly traded companies as clients, according to Auditor Trak. Most changed auditors after Andersen was indicted in March, depriving the company of more than $1 billion in annual revenue.
``We've already seen international organizations leave it, we've seen clients racing away,'' Bowman said, ``No one was waiting for the courts or the Justice Department to make decisions. They've already made their own conclusion.''
Lynn Turner, former chief accountant of the Securities and Exchange Commission, said bankruptcy for Andersen is now inevitable.
``It's time to name the person who's going to turn the lights out as they go out the door,'' said Turner, director of the Center for Quality Financial Reporting at Colorado State University. ``Their credibility is just so damaged and there are so few people who would want their name on any audit report, I just don't see them being able to survive.''
Bowman said it was unclear whether Andersen would file for bankruptcy protection to reorganize as a smaller company, or whether officials will liquidate the company.
In either case, the firm must sell as many of its assets as soon as possible, Bowman said. Any transaction made within 90 days of a bankruptcy filing can be pulled back into bankruptcy court, he said.
``Andersen wants to get these deals done and then stay in business at least three months,'' he said.
Andersen already has sold off large chunks of its U.S. operations to competitors Deloitte & Touche, Ernst & Young, KPMG and Grant Thornton.