The big tobacco companies have so far avoided paying out any large private settlements despite years of court litigation in the United States.

But they were forced into a settlement with the state governments who argued that deaths from tobacco related illnesses had cost them dearly.

They agreed to pay $246bn over 25 years, in the hope of limiting future lawsuits.

But the growing volume of new court cases has already reduced their value in the stock market.

The lawyers for the tobacco companies maintained that the nearly $145bn settlement, if maintained, would put them out of business.

"If there is ever a day when the verdict is final, it would put every one of these companies out of business," said Dan Webb, Philip Morris's attorney.

And R.J. Reynolds said the verdict was "unrealistically high."

Most stock market analysts tend to agree.

Mark Cohen of Goldman Sachs said that the sum assessed represented 15 or 20 times the companies' yearly cash flow.

Tobacco shares fell modestly in the stock market on Friday, but the value of the biggest company, Philip Morris, had already fallen since November 1998 by two-thirds, from $141bn to $56bn, valuing it less than the amount claimed in damages. Philip Morris produces more than half of the cigarettes sold in the United States.

However, legal analysts believe that the amount of damages could be reduced on appeal, and that the tobacco companies will succeed in delaying, if not eventually avoiding any payments.

Partly to compensate investor fears, tobacco companies also pay out some of the highest dividends on Wall Street.

Diversifiying out of tobacco

For two of the biggest companies, the main strategy has been to diversify out of tobacco.

Philip Morris, the biggest company, already owns Kraft Foods, one of the world's biggest food companies.

It has recently agreed to buy Nabisco, a leading US biscuit manufacturer, for $15bn.

Another strategy has been to shift most production and sales outside the United States.

British American Tobacco also recently consolidated its interests with its UK rival, Rothmans.

And Liggett, the smallest of the companies, has actually admitted liability - and therefore was awarded the least damages.

The companies also claim that they are now acting responsibly, trying to discourage under-age smoking and cooperating with government health officials.

In the long term, however, their high profits are likely to be at risk.

But with the court cases likely to continue in appeal for years, there will be more uncertainty in the market about the value of these companies for some time to come.