A somber Bernard Ebbers, WorldCom's president and CEO, Wednesday morning announced that WorldCom is splitting off its consumer business, renaming it MCI, and issuing a separate tracking stock.
"We've disappointed shareholders," Ebbers says. "I've disappointed myself." After buying more than 60 service providers WorldCom held on to too many assets that did not fit in with the company's core focus, he says.
WorldCom, which retains the companies original stock symbol "WCOM," will include the company's data, Internet, Web hosting, international, wireless and business voice services.
MCI, meanwhile, will include the company's residential voice, wholesale voice, small business, dial-up Internet, paging and prepaid calling card services. Ebbers says that some of its slower growth dedicated Internet access customers also will be part of its MCI division.
WorldCom expects to issue its MCI tracking stock by mid-2001. Similar to AT&T's tracking stock for AT&T Consumer, MCI will post dividends for stockholders.
Scott Sullivan, WorldCom's chief financial officer, sounding even more gloomy than Ebbers, says that WorldCom's growth for 2001 will be in the 12% to 15% range, which is lower than previous years. While only 30% of WorldCom's revenue will be coming from business voice services, the declining growth in that area will hurt WorldCom's revenue, he says.
But by 2004, Sullivan says that only 11% of WorldCom's revenue will come from voice, with Internet and data taking a front seat as bigger revenue generators for the company.
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