Struggling U.S. telecommunications company WorldCom Thursday posted a loss for its first quarter, pointing to a decline in business from corporate customers who are themselves suffering due to a weak economy.
The WorldCom group, composed of the company's Internet services businesses as well as corporate telephone and international businesses, reported net income of $184 million or 6 cents per share for the quarter ended March 31, which included a $90 million after-tax charge associated with the disposition of investments, such as News Corp., WorldCom said in a statement.
The results compare to net income of $532 million or 18 cents per share for the first quarter of last year, the Clinton, Miss., carrier said. Analysts polled by Thomson Financial/First Call had expected a profit of 17 cents per share for the first quarter in 2002.
Revenue for the quarter was $5.1 billion, a 2 percent decline from the same period a year ago. Data and Internet services revenue fell by about 1%t to $2.75 billion, while revenue from the company's voice business dropped 12% on a 2.5% decrease in calling volume, WorldCom said.
WorldCom characterized the telecommunications services market as continuing to be "unpredictable," and forecast full-year revenue for 2002 of between $21 billion to $21.5 billion.
WorldCom's MCI group, the long-distance and consumer-services division spun out last year as a tracking stock, posted a first quarter net loss of $54 million or 45 cents per diluted share, the company said in a separate statement. Analysts polled by Thomson Financial/First Call had expected a loss of 43 cents per share for the quarter.
The company's outlook for its MCI group remained muted, with the group expected to post a half-year loss in revenue that as a percentage will be in the mid-teens compared to the first half of last year, WorldCom said. In the second half of 2002, WorldCom MCI group is expected to post a percentage decline in revenue in low double-digits, the company said.
On a consolidated basis, WorldCom, composed of WorldCom group and MCI group, reported first-quarter net income of $130 million, a year-on-year decline of 78 percent from $594 million in the first quarter of last year, WorldCom said.
Consolidated revenue for the quarter was $8.12 billion, down from $8.83 billion in the previous year, WorldCom said.
WorldCom was able to cut its net debt in the first quarter by $903 million to $27.9 billion, the company said. Earlier this month, WorldCom said it was
cutting 3,700 of its positions from its data services division, a 6% reduction in its U.S. workforce.
In a telephone conference call, WorldCom Chief Executive Officer Bernie Ebbers said that the company would be able to meet the repayment schedule on its debt. The company has $60 million in debt payments remaining to be paid in 2002 and $1.6 billion due in 2003, Ebbers said.
WorldCom is "not in a panic" to sell assets to meet its debt repayments, though the company has about $2 billion in assets that it could sell if need be, Ebbers said.
Ebbers said that WorldCom is the subject of a U.S. Securities and Exchange Commission investigation into its accounting practices, but said that the company was cooperating with the investigation.
"You might have expected me to say that. We don't have a choice," Ebbers said.
WorldCom submitted seven boxes of documents to the SEC on April 17, and 12 more boxes of documents are to be given to the SEC on Friday, Ebbers said.
The IDG News Service is a Network World affiliate.
