Beleaguered telecommunications firm WorldCom Inc. is committed to re-invigorating its business and will do that by cutting staff and selling off assets as it attempts to pare down some US$30 billion in debt, newly appointed CEO John Sidgmore told shareholders at a meeting here Friday.
Sidgmore met face-to-face with shareholders -- who have watched WorldCom's stock price plummet from about $16.75 a year ago to about $1.65 on Friday -- for the first time since taking over for ousted WorldCom founder Bernie Ebbers in late April. Sidgmore admitted the company has been through "a public relations nightmare" and said concerns about its debt and liquidity have been "overstated."
"The first thing we have to do is restore an appropriate perception of WorldCom," he said. "WorldCom is a survivor and will be a survivor."
Without going into specifics, Sidgmore told shareholders that a strategic plan will be announced in detail in a few weeks that will include a variety of cost cutting measures aimed at making WorldCom a simpler, more nimble organization. He noted that WorldCom has acquired about 78 companies during the last five years.
"We've never really gone about the process of looking at those assets that are not performing and selling them, but that's what we're doing right now," he said.
Last week, WorldCom announced it was exiting the wireless resale business, which could save the company $700 to $800 million a year, Sidgmore said. Other cost-cutting measures already implemented include the decision to eliminate its MCI tracking stock and dividend payments, which Sidgmore said would save the company $284 million a year. WorldCom owns long-distance carrier MCI.
Sidgmore also said WorldCom is working on selling some assets in South America, and reviewing real estate and facilities to decide which to sell or close. As for staff cuts, Sidgmore did not directly address rumors that the carrier was planning to slash 16,000 jobs from its 80,000-person workforce, but did say reductions were coming.
"We said we would be right-sizing the business and unfortunately that is going to require some staff cuts," he said.
WorldCom, along with other telecommunications companies, has been hit hard by the sluggish economy. As revenues dropped, concerns have grown over its debt load. In April, Ebbers resigned under pressure amid questions about loans that WorldCom extended to him. In addition, the U.S. Securities and Exchange Commission has WorldCom's accounting practices under review.
Shareholders expressed frustration over the financial situation of WorldCom, the pace of the strategic plan and a severance package given to Ebbers.
Sidgmore reminded investors that despite its recent troubles, WorldCom maintains a set of deep assets that should help carry it through and save it from falling into Chapter 11 or being acquired. WorldCom executives noted that WorldCom has not lost any major customers, and in fact added three new large enterprise customers this quarter.
"This is a company with over $30 billion in revenue. We have over 25 million customers, we're cashflow positive," Sidgmore said. "We have a wide variety of assets underneath all this that give us a lot of options. ... If you think about the assets that we have and get rid of all the nonsense that's been covering the story. I think we'll have a have a good chance of unveiling the value there."