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Net income for the telecommunications company fell to USD258 million from USD726 million in the fourth quarter a year ago, while sales declined 12 percent to USD8.48 billion from last year, although in the year-ago period the company's results included its interest in Brazilian carrier Embratel.
WorldCom said sales at its data-services unit, WorldCom Group, will rise at a mid single-digit percentage rate in 2002 although previously the company had forecast a high single-digit to low double-digit increase. Moreover the company said it may have to write down USD15 billion to USD20 billion in goodwill because of an accounting change.
Net income at WorldCom Group fell 42 percent to USD347 million, or USD0.10 a share, from USD601 million, or USD0.20 cents, a year earlier. Sales declined 9.6 percent to USD5.3 billion. In positive news however WorldCom's massive debt was reduced by USD1 billion to USD24.7 billion.
The last few months have been tough for WorldCom and for its chief executive Bernie Ebbers in particular. Jittery investors on Wall Street, nervous over the Enron scandal, Global Crossing's bankruptcy and subsequent questions over its accounting practices, have been selling their WorldCom stock. The company's stock has fallen to around USD6.69, the first time the shares have gone below USD7 since 1995, and well down form the USD16 level it was trading at in early December 2001.
The plunge of WorldCom's stock price is expected to force Ebbers to repay personal loans totalling USD183.7 million from Bank of America and the telecommunications company itself. Ebbers borrowed the money in 2000 to help cover an earlier demand that he put up additional collateral for WorldCom stock he had bought on credit, or margin, before the company spun off its consumer long distance business, MCI, into a tracking stock.
Analysts say that the company's lowered profit estimates, announced on Friday, could restore some confidence in the stock in New York. Although volumes were low, WorldCom shares in the German markets were up following the release of the company's results. In Frankfurt the company shares were trading at EUR8.50, up over 10 percent by 2pm GMT on Thursday. Meanwhile In Berlin and Hamburg the shares were up nine percent and 11.5 percent respectively.
In its results the company said had less than USD10 million in receivables from Global Crossing. "We do not anticipate any material negative operational impact from the bankruptcy proceeding or its outcome," WorldCom said. Of course Global Crossing itself was hit with a similar write off when Exodus went bankrupt last year. Moreover WorldCom said it wrote off less than USD1.5 million of receivables from Enron in the fourth quarter.
"In a year filled with unexpected challenges and tough market conditions, WorldCom maintained its market-leading position in key growth areas of our industry -- data, Internet and international," Ebbers said in a statement on Thursday. "I am more confident than ever that WorldCom is well positioned in today's environment, as well as when economic growth returns."
Worldcom employs around 200 in Dublin, Cork, Limerick and Galway and has over 6,000 corporate customers here. Last year the company announced 1,000 job cuts in Europe, although spokespeople for the company told ElectricNews.Net that these cuts have had no impact on operations here. WorldCom also runs a 60,000 square foot data centre in Ireland that was completed in late 2001 at a cost USD35 million.
Worldwide the company employs around 70,000 with almost 10,000 of those workers in Europe. WorldCom in Ireland can be found at http://www.worldcom.com/ie.
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