Credit ratings agency Moody's recently downgraded BearingPoint (NYSE: BE)'s ratings from B1 to B2, and put them on watch for further potential downgrade. The agency took note of the firm's year-to-date cash outflows, due to finance and accounting systems costs and of course the inordinate delays in filing its 10-K and last but not least the huge employee turnover seen in Q2 -2006. These ratings are considered speculative.

As we said before, BearingPoint (NYSE: BE) will be further delaying filing its financials and estimated performance far below previous projections.

Now not only investors but also creditors will be on watch, and if performance does not match expectations not only will the stock take a hit but its debt costs will continue to increase.

BearingPoint's troubles are not over yet, and it is facing the worst situation for a public company: disappointed investors and creditors. The turnaround is taking longer than anticipated and there is a constant stream of tough news, including a recent suit from bondholders.

We ask a difficult question: Should BearingPoint continue as a public company? Can it handle all the pressures of periodic reporting, stakeholder scrutiny and continue to operate without transparent financials? Can we speculate that the private equity boom will impact BearingPoint (NYSE:BE), make a tender offer for the entire company and take it private? Away from the public eye, the firm can focus on the longer-term and fix its situation with bolder moves. Operations appear to be strong and there are contracts still flowing in, so the situation is not desperate but fixable. We will wait and see what develops, but conjecture that something like this has a good possibility to occur.
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