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AT&T, Inc. Message Board

  • GR_Magic GR_Magic Apr 25, 2002 2:36 PM Flag

    WCOM Going Bankrupt????

    All problems are relative. AT&T's future looks very bright indeed relative to No. 2 (and not trying harder).


    CBS.MarketWatch.com 4/25/2002

    WorldCom profit falls as sales drop

    CLINTON, Miss. (CBS.MW) - WorldCom on Thursday said first-quarter profit plunged, citing falling prices and cutbacks by corporate customers who buy data and Internet service from the No. 2 U.S. long-distance carrier.
    In the latest quarter, WorldCom (WCOM: news, chart, profile) said it earned $130 million, down from $594 million a year earlier. Those figures include the results from the MCI Group consumer long-distance business, which trades as a separate stock.
    WorldCom Group, the company's data and Internet segment, posted a net profit of $184 million, or 6 cents a share, down from $532 million, or 18 cents a share, a year ago.
    Excluding special items, WorldCom Group earned 9 cents a share, down from 20 cents a year earlier. That segment was expected to earn 13 cents, according to the consensus of analysts surveyed by Thompson Financial/First Call.
    Revenue slid 2 percent to $5.08 billion from $5.2 billion a year earlier.
    "Our data and Internet production was affected by disconnects from e-business oriented customers as well as cost driven network reductions from enterprise customers," Chief Executive Bernard Ebbers said in a statement.
    MCI Group (MCIT: news, chart, profile) posted a net loss of $54 million, or 45 cents. The unit, which was turned into a separately traded stock last summer, was expected to lose 43 cents.
    Revenue sank 16 percent to $3 billion. "Voice revenues are pressured by price reductions and network downsizing by existing customers that offset new billed revenue," Ebbers said.
    The MCI unit's stock closed at $4.23, up 33 cents. The stock is just a fraction of its all-time high of $22.50.
    Overall WorldCom sales dropped to $8.1 billion from $8.8 billion. The company said it generated $952 million in free cash flow from operations.
    Free cash flow, which reflects the amount of cash left over after a company pays its bills and makes new investments, is crucial in paying off interest and principal on debts. Analysts say the company has to boost free cash flow in the coming months and years to avoid defaulting on billions in scheduled debt payments.
    On Wednesday, WorldCom stock closed up 7 cents to $3.48 - far below its 52-week high of $21.52. Shares have lost 42 percent of their value since the company late last Friday stunned Wall Street by cutting its forecast for fiscal 2002 sales and cash flow.
    The warning triggered a massive selloff in telecommunications stocks earlier in the week and fueled concerns about whether the debt-laden carrier can survive.
    In its earnings report, WorldCom reiterated last Friday's projections for 2002 - revenue of $21 billion to $21.5 billion and earnings before interest, taxes, depreciation and amortization of $7 billion to $7.5 billion.
    WorldCom has been hit by a triple whammy: fierce competition, falling customer demand and an excessive debtload.
    The consumer long-distance voice market is extremely competitive, while big corporations, the primary purchasers of WorldCom's data services, have scaled back spending during the U.S. recession.
    That's made it increasingly difficult for WorldCom to service interest payments on its long-term debt of nearly $30 billion. In the latest quarter, WorldCom said it reduced its debt by $903 billion to $27.9 billion.
    Still, many analysts are now expressing skepticism about whether the company can survive as an independent entity. At least four brokerages cut their ratings to "sell" after the sales warning - an unheard of event on Wall Street for a company of WorldCom's size.
    Jeffry Bartash is a reporter for CBS.MarketWatch.com in Washington.

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    • "The consumer long-distance voice market is extremely competitive, while big corporations, the primary purchasers of WorldCom's data services, have scaled back spending during the U.S. recession.
      That's made it increasingly difficult for WorldCom to service interest payments on its long-term debt of nearly $30 billion. In the latest quarter, WorldCom said it reduced its debt by $903 billion to $27.9 billion.
      Still, many analysts are now expressing skepticism about whether the company can survive as an independent entity. At least four brokerages cut their ratings to "sell" after the sales warning - an unheard of event on Wall Street for a company of WorldCom's size."

      WOW - Cut its debt by $903 billion. And they still cut the ratings!

    • WCOM stinks but T stinks more. Based on the release you posted, it appears to me that T's revenues are dropping faster than WCOM's. If that's the case, who is going bankrupt FIRST?!!

 
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