WorldCom Income Sinks

The pall over the telecom sector showed no signs of lifting Thursday, with WorldCom releasing disappointing financial results in which revenue and profit fell for the quarter and the year. For the year, net income sank to $1.40 billion, down 55% from 2000, as revenue slipped 6% to $21.35 billion. In the fourth quarter, net income dropped to $305 million, a 48% decline from the same period the previous year, while revenue dipped 10% to $5.30 billion.

WorldCom did manage to dispel a few worries by reassuring investors that it wouldn't face major losses from business deals with recently bankrupted Global Crossing. The company made a loan to CEO Bernie Ebbers, who had borrowed heavily against the value of WorldCom and MCI stock, leaving investors concerned Ebbers would have to dump millions of shares now that the stock's value has fallen sharply. Ebbers says he'll sell other personal assets to repay the loan. Finally, Ebbers sought to dispel the notion that the company, which grew in part through aggressive acquisitions, would face the kind of doubts about its accounting practices that are becoming more common in the wake of Enron Corp.'s failure.

The company lowered revenue growth projections for this year to the mid-single digits, yet at least one analyst thought the news wasn't all bad. "Even though the specific results were down on a year to year and quarter to quarter basis, things seem to be stabilizing," says Russ McGuire, chief strategist at consulting company TeleChoice.

Earlier in the week, Sprint Corp. released disappointing results for its local phone and long-distance FON Group and its wireless PCS Group, in which the two businesses lost $1.24 billion in the quarter ended Dec. 31 and $1.41 billion for the year, including one-time write-offs. Annual revenue rose 9%, to $26.07 billion.