Falling victim to a slowdown in telecom spending, lost e-business and competitive pricing pressures, WorldCom Inc.'s year-over-year profit sank in the first quarter.
Including results from its MCI Group, WorldCom earnings dipped from $594 million a year ago to $130 million.
The company's data and Internet business, dubbed WorldCom Group, reported a net profit of $184 million, or 6 cents a share. In first quarter 2001, the group posted a net profit of $532 million, or 18 cents a share. Excluding special items, WorldCom Group earned 9 cents a share, down from 20 cents a year earlier. The segment missed Wall Street's expectations by 5 cents a share. According to a survey by Thomson Financial/First Call, WorldCom Group was expected to earn 11 cents. Revenue dipped 2 percent from $5.2 billion to $5.08 billion.
WorldCom's consumer unit MCI Group also fell short of analysts' consensus loss estimates. Although analysts were expecting a loss of 43 cents a share, the consumer group posted a net loss of $54 million, or 45 cents a share. In the first quarter of 2001, MCI Group reported pro forma earnings of $62 million, or 54 cents a share. The unit was spun off as a separate trading stock last summer.
During the quarter, WorldCom reduced its debt by $903 million to $27.9 billion. The company has taken steps over the past several months to reduce costs, including cutting staff. As of March 31, WorldCom had $2.3 billion in cash and cash equivalents.
Following a revised forecast on April 19, Moody's Investors Service and Standard & Poor's cut their WorldCom Group's credit ratings by two notches. Moody's rates WorldCom at Baa2 and S&P rates the company at BBB. Although the company remains above "junk" status, both ratings firms said they might cut again.