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WorldCom stock sinks on SEC inquiry
March 12, 2002
The cuts will all be in the United States and will all come from the WorldCom group, the company's data and Internet business. There will be no cuts at the company's MCI group.
The job cuts will "better align" WorldCom's costs with the revenue projections it issued in February, the company said. At that time, WorldCom said it expected to see growth in the mid-single digits.
It has been a dismal few months for the telecom sector, and Clinton, Miss.-based WorldCom has not been spared. Bath pointed to a "tougher-than-anticipated demand and pricing environment," adding that the company's financials were "based on unsupportable dividends and interest" at its MCI division.
Last month, WorldCom cut its outlook for 2002 and reported that fourth-quarter profits for the WorldCom Group, its data and Internet business, dropped to $384 million, or 13 cents a share, from $585 million, or 20 cents a share, a year earlier.
"WorldCom Inc. has been shrinking and we believe will continue to do so for the next several years," Bath wrote in his research note.
The Securities and Exchange Commission has also been investigating some of the company's accounting procedures, which could put pressure on the stock, Bath said.
Separately, WorldCom announced Wednesday that its MCI subsidiary would redeem $700 million of its 6.125 percent notes. The move is part of a broader plan to reduce the company's debt, executives said. As of March 31, the company's debt level stood at $30 billion.
WorldCom had more than $2.2 billion in cash on hand as of March 31, up from $1.4 billion on Dec. 31. Holders of the notes will get the principal amount back, plus accrued and unpaid interest on the notes up to April 15, 2002.
