WorldCom Inc. on Thursday reported that its first-quarter revenue grew 12 percent to US$9.7 billion while its earnings also matched lowered expectations. Revenue was up from $9.6 billion in the same quarter last year, the company said during a morning conference call.
For the first quarter, ended March 31, cash earnings were $1 billion or $0.35 a share, WorldCom said. Consolidated net income, after goodwill amortization, was $729 million or $0.25 a share, matching the consensus expectations of 14 analysts, according to First Call/Thomson Financial.
"WorldCom is certainly not immune to the effects of the economy," said Bernard Ebbers, WorldCom's chairman and chief executive officer, during the conference call. "We are being impacted like everyone else. But with the visibility we have and our significant growth engines, we continue to have confidence in our ability to achieve our 12 percent to 15 percent 2001 growth target. If we look out for the remainder of 2001, we do not see any storms on the horizon at this time."
WorldCom is split in two divisions. Its WorldCom group, which includes its data, Internet, international operations and commercial voice services, reported revenue of $6.1 billion, a 12 percent increase over the same period in 2000. The company saw 22 percent year-over-year revenue growth in data and Internet services and 19 percent revenue growth in international services.
WorldCom group reported cash earnings of $865 million or $0.30 per share, WorldCom said. WorldCom group net income, after goodwill amortization was $638 million or $0.22 per share in the quarter.
Data and Internet services accounted for $2.8 billion or 45 percent of WorldCom group's revenue, the company said. This was up from 42 percent of quarterly revenue for the same time in 2000.
"Internet revenue grew 35 percent," said Scott Sullivan, WorldCom's chief financial officer, during the conference call. "We saw strong demand for high-speed circuits in our customer base as they consumed greater amounts of bandwidth for their operations."
International services account for 26 percent of WorldCom group's revenue. Revenue from Europe grew 19 percent, while it was up 87 percent from the Asia/Pacific region, Sullivan said. Business voice revenue, however, dropped 5 percent from the same time last year and now represents 28 percent of WorldCom group revenue.
"We are off to a strong start for the new year," Sullivan said. "We saw double-digit revenue growth within the WorldCom group."
The company's MCI group, which is the Jackson, Mississippi-based telecommunication provider's consumer, small business, wholesale long distance, wireless messaging and dial-up Internet access business, reported revenue of $3.6 billion for the quarter compared to $4.2 billion for the same time last year. MCI Group saw revenue growth in consumer subscription long distance and local services, despite industry trends to the contrary, the company said. However, the group saw a downturn in calling card services, among other business areas, which are being adversely impacted by customers moving to wireless services, the company said.
MCI group reported cash earnings of $158 million or $0.05 a share. The group had a net income of $91 million or $0.03 a share.
WorldCom took after-tax charges of $76 million for domestic severance packages and other costs related to layoffs. The company also incurred $94 million of expenses from the foreign currency exchange on Embratel Participacoes SA, WorldCom's Brazilian communications company.
The company expects the WorldCom group revenue to grow 12 percent to 15 percent and expects World group's cash earning between $1.25 and $1.35 per share for the year. WorldCom, however, expects declining, but stabilizing sequential revenue from the MCI Group.
The MCI group expects earnings between $0.25 to $0.30 per share for the full year. WorldCom also said it expects the MCI group to generate sufficient cash flow in 2001 to service its anticipated dividends and allocated debt.
WorldCom shares (WCOM) traded up $0.90, or 4.64 percent, to $20.29 a share during midday trading Thursday.
WorldCom, in Jackson, Mississippi, can be reached at +1-601-360-8600 or http://www.wcom.com/.