Telecommunication and data services provider WorldCom Inc. reported a sharp drop in its third-quarter net income Thursday, with a profit of US$536 million, down from $1.36 billion a year ago. Revenue of $9 billion was about even with last year.
In June, WorldCom issued two tracking stocks in place of its previous stock, one for the performance of its high-growth data and Internet services and another for its consumer long-distance services.
Net profit for WorldCom's fast-growth business and data services division, the WorldCom Group, fell to $460 million, or $0.16 a share, compared to $0.27 a share in the year-ago quarter. Profits met the consensus of Wall Street analysts' expectations, as measured by Thomson Financial/First Call. Reported revenue for the WorldCom Group increased 12 percent year-over-year, to $5.5 billion, due largely to a 22 percent increase in revenue for data and Internet services.
Net income for its long-distance and consumer division, MCI Group, fell to $33 million, or $0.28 per share, versus $49 million, or $0.42 per share in the second quarter of 2001 and down 94 percent from the $560 million, or $4.87 a share, a year ago. Revenue fell 20 percent to $3.5 billion in the quarter, from $4.2 billion in the same quarter last year.
While other technology companies have been quick to point at the Sept. 11 attacks on U.S. targets as the reason for financial difficulties, WorldCom executives aren't certain of the financial impact the attacks have had on business.
"We can't tell what's due to Sept. 11 and what's due to macroeconomic forces," said Bernard Ebbers, WorldCom's chief executive officer, in a teleconference. "Given the circumstances, I'm proud of what we've been able to deliver ... we'll take what the market gives us."
WorldCom executives predicted that WorldCom revenue will grow at a slower pace next quarter, with an increase of 10 percent, and that revenue growth will be 12 percent to 15 percent for the 2001 fiscal year. Growth next year will be slower than this year, Ebbers said, figuring percentage increases "in the high single digits to low teens."
Like other major telecommunication carriers, WorldCom reiterated plans to scale back capital expenditure for new network equipment in the coming year. WorldCom plans to spend $1.6 billion in the fourth quarter and about $5.5 billion next year on new equipment.
WorldCom (WCOM) stock dropped slightly to $12.43 in midmorning trading on Thursday, down from Wednesday's $12.45 close. The MCI Group (MCIT) opened at $11.60 and started sinking, down 5.17 percent to $11.00 in midmorning trading.