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WorldCom raises guidance
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April 26, 2001: 10:00 a.m. ET
Telecom meets forecasts with drop in profits but says will beat full year target
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NEW YORK (CNNfn) - WorldCom Inc. Thursday reported a drop in first-quarter profit on a decline in sales in its core business, though the No. 2 U.S. long-distance telephone company said it should beat earnings forecasts for the year.
WorldCom said first-quarter earnings fell to 25 cents a share, meeting Wall Street forecasts, but its stock rallied on the forecast for the full year, adding 49 cents to $19.88, a gain of 2.5 percent.
The company said that it sees its MCI unit, which includes its consumer, small business and wholesale long-distance business, contributing 25 cents to 30 cents a share to earnings during this year, even as revenues there continue to decline.
The company said its fast-growing WorldCom unit should produce earnings equal to $1.25 and $1.35 a share during the year. That segment includes data, Internet and international operations, as well as commercial long-distance service. The company plans to issue separate tracking stocks for its WorldCom Group and MCI Group units.
The combined results of between $1.50 and $1.65 a share would well exceed forecasts of analysts surveyed by earning tracker First Call, who were forecasting overall earnings of only $1.10 a share for the company as a whole this year, down from $1.62 a share in 2000.
In the first quarter, WorldCom (WCOM: Research, Estimates) earned $729 million, or 25 cents a diluted share, from operations, excluding charges for previously announced staff cuts. That's in line with First Call's forecasts but down from $1.2 billion, or 44 cents a share, on the same basis a year earlier.
Most of the drop came from its MCI Group, as profit in that unit fell 89 percent to $62 million from $537 million a year earlier. Sales fell to $3.6 billion from $4.2 billion.
But income also slipped at WorldCom Group, to $638 million from $649 million, even as revenue rose 12 percent to $6.1 billion.
Overall sales edged up to $9.7 billion from $9.6 billion. 
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