Jul 27, 2001 : WorldCom Profits Fall in Q2

📅 July 27, 2001 - WorldCom, Inc. yesterday announced the financial results of the WorldCom group for the quarter ended June 30, 2001, reporting an overall increase in revenue, but a lower net income for its data and long-distance services compared to last year's profits. The company blamed pricing pressures and tough competition as the main factors for the decline.

In June, WorldCom issued two tracking stocks in place of its previous stock,one to mirror the performance of its data and Internet services and anotherto er long-distance services. The combined revenue of the two divisions was$8.9 billion and net income of $623 million after goodwill amortization.
WorldCom's data and services division reported net income excluding one-timeitems of $574 million (including a $55 million charge for the termination ofa Sprint merger agreement), or 20 cents per share, compared with $771million in earnings, or 26 cents per share, in the second quarter of 2000.Growth in international services, data, and Internet services upped WorldComGroup's revenues by 12.1 percent, to $5.4 billion.
WorldCom's MCI Group consumer long-distance division reported net losses of$29 million, or 25 cents per share, compared with a profit of $541 million,or $4.75 per share, a year earlier. Stiff competition drove down revenuefor the MCI Group to $3.5 billion from $4.2 billion.
In July 2001, WorldCom decided to permanently reduce its investment inBrazil and took steps to restructure its investment in long-distance companyEmbratel. WorldCom determined that it could no longer exercise control overEmbratel and deconsolidated the investment, reporting equity in Embratel'searnings as miscellaneous income.
Internal cash flows at the WorldCom group improved over $600 million duringthe quarter and were achieved through increased cash from operations as wellas less cash used in investing activities.
WorldCom EBITDA (earnings before interest, taxes, depreciation andamortization) was $2.0 billion, an $82 million sequential increase and up$32 million from the same period last year. WorldCom group EBITDA marginwas 38 percent and includes the continued impact of previously announcedspending on growth initiatives, such as managed web hosting andInternet-based virtual private networks.
In spite of the uncertain global economic environment, the company expectsfull-year 2001 WorldCom group revenue growth of between 12 and 15 percentand expects WorldCom group EBITDA to be between $7.8 and $8.3 billion.WorldCom group's cash earnings are expected to be between $1.05 and $1.10per share for the year.