WorldCom Earnings Fall 44 Percent
Thursday, February 8th 2001, 12:00 am
News On 6
JACKSON, Miss. (AP) â€” WorldCom Inc.'s fourth-quarter earnings dropped 44 percent as long-distance revenue fell, but company executives say their strategy of focusing on high-growth businesses is starting to pay off.
The long-distance and Internet company said Thursday it earned $726 million, or 25 cents a share, in the October-December period, compared with $1.3 billion, or 44 cents a share, in the same period a year ago.
That was in line with analyst forecasts who revised their estimates in November after WorldCom said it would restructure its operations and issue a separate tracking stock for its long-distance services.
``When you think of 25 cents versus 44 cents, it's a big difference,'' said David Burks, an analyst with the brokerage J.J.B. Hilliard, W.L. Lyons in Louisville, Ky. ``But the important thing is that they were in line with expectations and there was no further deterioration in the company's business.''
Sales were up more than 3 percent to $9.6 billion in the fourth quarter, compared with $9.3 billion a year ago.
The Clinton, Miss.-based company reported separate results for its WorldCom Group and MCI Group.
``It's not an easy task to separate a company the size of WorldCom and change behaviors that have been engrained over time,'' Bernie Ebbers, WorldCom's president and chief executive, said during a conference call with investors.
Ebbers said the company will stick to its forecast of 12 to 15 percent revenue growth in the WorldCom Group for 2001 â€” news that analysts found encouraging.
In late trading Thursday on the Nasdaq Stock Market, shares of WorldCom were up 19 cents to $20.31.
Analysts were pleased with that WorldCom is ahead of schedule in its plans to issue the tracking stock, which will be called MCI and trade under the symbol MCIT. The company hopes to distribute the shares in the second quarter.
The earnings report did not mention job cuts reported last month, and the subject did not come up during questions from analysts. A company spokesman had no comment.
The WorldCom Group, which includes the international, data and Internet services sectors, led the company's growth with $5.8 billion in revenue for the quarter, up from $5 billion in the same period a year ago.
Revenue for WorldCom's MCI Group, which includes its long-distance, calling card and dial-up Internet access sectors, fell nearly 10 percent to $3.8 billion from $4.2 billion a year ago.
Long-distance revenue declined to $1.7 billion, down from $1.8 billion in the same period a year ago. WorldCom is the nation's second-largest long-distance provider, behind AT&T Corp. and ahead of Sprint Corp.
For the year 2000, WorldCom reported net income of $4.7 billion, or $1.61 per share, compared with $4.0 billion, or $1.35 per share, for 1999. Revenue for the year rose to $39.1 billion from $35.9 billion a year ago.
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