Jul 5, 2001 : WorldCom Adjusts Financial Guidance
📅 - Global communications firm WorldCom Inc. reduced its cash-earnings outlook for 2001 today, citing accounting changes related to the restructuring of its ownership interest in Brazilian carrier Embratel.
WorldCom said it would not combine Embratel's financial results with its own as previously planned. The company has a 19 percent stake in Embratel, Brazil's larges long-distance telephone company.
The restructuring of ownership, coupled with WorldCom's May 2001 debt issuance and the impact of acquiring communications and hosting firm Intermedia/Digex, prompted the company to adjust its guidance.
"We have taken very proactive measures to fund our expected growth, as well as investing in networks, systems and acquisitions to enhance our position in strategic areas like Internet-based virtual private networks and managed Web hosting," said Bernard J. Ebbers, President and CEO of WorldCom. "These actions improve WorldCom's ability to execute its mission of providing enterprise customers around the world with the digital communications services they need. While these deliberate measures impact our below-the-line earnings in the short-term, I'm confident they make the company stronger going forward."
Ebbers said restructuring its ownership in Embratel was a result of market confusion. "Continuing to consolidate Embrapar's financial results, even though we only have a 19 percent economic interest, was causing undue confusion in the market," he said. "WorldCom is focused on serving the expanding digital communications requirements of enterprise customers, and all of our assets will be aligned in that direction. Any detractions from that mission are going to be addressed."
Shares in WorldCom were up 17 cents to $14.64 in late morning trading.
WorldCom said it would not combine Embratel's financial results with its own as previously planned. The company has a 19 percent stake in Embratel, Brazil's larges long-distance telephone company.
The restructuring of ownership, coupled with WorldCom's May 2001 debt issuance and the impact of acquiring communications and hosting firm Intermedia/Digex, prompted the company to adjust its guidance.
"We have taken very proactive measures to fund our expected growth, as well as investing in networks, systems and acquisitions to enhance our position in strategic areas like Internet-based virtual private networks and managed Web hosting," said Bernard J. Ebbers, President and CEO of WorldCom. "These actions improve WorldCom's ability to execute its mission of providing enterprise customers around the world with the digital communications services they need. While these deliberate measures impact our below-the-line earnings in the short-term, I'm confident they make the company stronger going forward."
Ebbers said restructuring its ownership in Embratel was a result of market confusion. "Continuing to consolidate Embrapar's financial results, even though we only have a 19 percent economic interest, was causing undue confusion in the market," he said. "WorldCom is focused on serving the expanding digital communications requirements of enterprise customers, and all of our assets will be aligned in that direction. Any detractions from that mission are going to be addressed."
Shares in WorldCom were up 17 cents to $14.64 in late morning trading.
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