WorldCom Inc. (WCOM) stock slumped to a new low Tuesday and set a Nasdaq trading record with nearly 640 million shares changing hands, a day after the once high-flying telecommunications company was dropped from the S&P 500 Index.

The hectic trading in Worldcom more than doubled the previous record of 308.7 million shares traded on Nasdaq in Intel Corp. on Sept. 22, 2000 and 281.6 million shares of Cisco Systems Inc. on Feb. 7, 2001.

More than 200 million Worldcom shares traded in the last hour alone, and including after-hours activity volume rose to more than 666 million shares.

WorldCom stock dropped 20 cents, about 14 percent to $1.24 on Nasdaq. Earlier in the day, it set a new low of $1.08 -- down more than 90 percent from its 52-week high of $19.01.

The stock drop was just the latest woe for Worldcom, which is suffering along with its telecommunications peers from slack demand and over supply of telecommunications network capacity.

Standard & Poor's, which cut WorldCom bonds to a "junk" rating last Friday, said on Monday that it was removing the No. 2 U.S. long distance telecom service provider from the S&P 500 Index. Worldcom's Chief Executive Bernie Ebbers resigned at the end of last month, and the U.S. Securities and Exchange Commission is looking into the company's accounting and $366 million worth of personal loans made to Ebbers.

"It's an accumulation of bad news. On Friday (S&P's comment) was one of the most scathing I've ever read on a downgrade," Dresdner Kleinwort Wasserstein analyst Bruce Roberts said. "We don't think there's any equity value left."

Roberts said that some investors had bought the stock in the hope of a turnaround but noted they "are finally getting it into their heads the business customer base will have to think twice before going with WorldCom."

"This could turn into a snowball effect. A restructuring of its bonds is not beyond the realm of possibility," he said.

LAST OF THE BAD NEWS?

Asked about the being dropped from the S&P 500, WorldCom spokesman Brad Burns said, "This has absolutely no impact on our customers and our liquidity."

The move, however, means that some professional investors, and particularly index mutual funds that mimic the Standard & Poor's 500, will drop Worldcom in favor of the new members of the S&P 500. Also some investment committees require their investment universe be part of the S&P 500.

One analyst said the company's situation could start to improve, depending on the outcome of an SEC review of WorldCom's accounting procedures and loans to officers.

"This is probably the last of the pieces of bad news," Thomas Weisel Partners LLC analyst Peter DeCaprio said, noting that WorldCom could get a new bank credit line in June.

"The new management team is focused on customers and not the stock price and bonds, which I think is a good sign," DeCaprio added, but said the prospect that customers could leave is a "natural concern".

Along with S&P, rating agencies Moody's investors Services and Fitch Ratings also downgraded Worldcom's debt to "junk" status last week.

Analysts are now waiting for two key dates.

WorldCom had said earlier this month it was in talks to replace a $2 billion financing program backed by customer payments with a $1.5 billion program. The deal is expected to close by May 23.

The company also said it expects to replace its existing $2.65 billion bank credit facility that expires on June 7.

"It's one step at a time," Credit Lyonnais Securities analyst Rick Grubbs said. "After that they have to keep their customers. If they can do that they'll be fine ... If anything doesn't work there could be big trouble."

Although WorldCom is not seen to have liquidity problems, Grubbs said he believes there is a 50/50 chance it will survive. He also forecast moves including downsizing through layoffs and the sell-off of assets.

"It may have liquidity but if management says once it downsizes it can't service its debts, that creates another decision point," Grubbs added.