WorldCom Inc. on Thursday reported reduced earnings at WorldCom Group, its Internet, data and business phone division, and said continuing sluggish telecommunications spending requires lowered earnings forecasts for the year ahead.
WorldCom Groups pro forma net profit, which excludes certain items considered normal business expenses under generally accepted accounting principles, was $384 million, or 13 cents a share. Analysts surveyed by Thomson Financial/First Call were expecting one cent better per share.
The companys net profit is down from $585 million, or 20 cents a share, in the same quarter one year ago. Revenues were $5.3 billion, 7 percent above the same quarter one year ago.
Revenues from international operations grew 23 percent, data and Internet revenues grew 13 percent, and voice revenues declined 8 percent from the year-ago period.
WorldCom Group projected “mid-single digits” growth in the year ahead, down from earlier predictions of double-digit growth.
In a conference call with analysts Thursday morning, WorldCom Inc. CEO Bernard Ebbers said that WorldCom Groups revenue projections were not predicated on a general economic turnaround. “We just do not feel it is appropriate at this time to predict when the recovery will occur,” he said.
Despite the sluggish financials, WorldComs stock (which includes both the WorldCom Group and MCI Group, or consumer long distance division) was up in morning trading after a fiery explanation from Ebbers about the companys future, an explanation of his plans to pay off nearly $200 million in personal debt to the company, and WorldComs explanation of important balance sheet issues, which have become the focus of much attention after the Enron Corp. imbroglio.
Among those issues: WorldCom Group said it was forced under U.S. generally accpeted accounting principles to exclude certain income from Brazilian telecom Embratel Participacoes after its restructured its stake in the company last year. Moving that income to miscellaneous income on the balance sheet caused a decline in profit from the previous year, the company said.
WorldCom Inc. said it has less than $10 million in receivables from Global Crossing and does not expect “any material negative operational impact from the bankruptcy proceeding or its outcome.”
WorldCom Inc. also wrote off less than $1.5 million of receivables from the troubled Enron in the fourth quarter, with no exposure to the company.
WorldCom Inc. also noted that other than operating leases incurred in the normal course of business, it has no “off balance sheet financings” and “no special-purpose entities.”