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WorldCom warns on '01
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July 5, 2001: 2:11 p.m. ET
Telecom says growth unit will fall short of forecasts and previous year guidance
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NEW YORK (CNNfn) - Telecom service provider WorldCom Inc. warned Thursday that 2001 profit in its key business segment will be below the company's previous guidance, although the division's second-quarter results should be in line with current forecasts.
The company said its WorldCom Group -- which includes its Internet, data and international business but not its core consumer long-distance service -- should see consolidated cash earnings per share for the year of $1.05 to $1.10, compared with what the company said is a consensus estimate of $1.20, and the company's earlier guidance of $1.25 to $1.35.
Those earnings projections and guidelines do not compare with the estimates of analysts surveyed by earnings tracker First Call, which has a current consensus forecast of 91 cents per share for WorldCom's total business.
Early last month, WorldCom shareholders approved the creation of two tracking stocks as it proceeds with restructuring plans. The idea is to use WorldCom Group's (WCO: Research, Estimates) stock to reflect the performance of its high-growth businesses while using the MCI Group (MCIT: up $0.33 to $16.98, Research, Estimates) tracker to show the performance of its consumer, small business, wholesale long-distance, wireless messaging and dial-up Internet operations.
Joe Cooper, of First Call's research division, said that few analysts have started giving separate estimates for each unit.
The company also said Thursday that WorldCom Group's cash earnings per share excluding currency loss and other one-time items currently are expected to be between 28 and 29 cents, which it said is in line with consensus estimates.
Additionally, the company announced a restructuring of its investment in Embratel Participacoes (EMT: Research, Estimates), the Brazilian telecom also known as Embrapar, which means the company no longer will consolidate Embrapar's operations in its results starting in the second quarter.
Embrapar, the parent company of Embratel, Brazil's nationwide communications provider, was expected to add 4 cents a share to WorldCom Group's results in the quarter.
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"Embratel continues to play an important role in WorldCom Group's international growth strategy by extending our ability to offer global customers services throughout the world," WorldCom CEO Bernard Ebbers said. "But continuing to consolidate Embrapar's financial results, even though we only have a 19 percent economic interest, was causing undue confusion in the market."
Shares of WorldCom Group and MCI each were moving higher in afternoon trade Thursday. 
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