WorldCom Pulls A Quarterly Profit Out Of The Hat

Struggling WorldCom Inc. has done what archrival AT&T couldn't do. It posted a first-quarter profit--$610 million, compared to the $373 million loss that Ma Bell rang up Tuesday. But, like AT&T, Worldcom fell far short of the quarterly profit ($1.2 billion) it posted a year ago. Revenue for WorldCom inched up 1.1%, to $9.72 billion for the quarter, which ended March 31.

WorldCom's 49% drop in profit underscores the need for the second-largest U.S. long-distance telco to acquire a nationwide wireless carrier. Sales for AT&T's wireless unit rose 46%, to $3.2 billion. Sprint Corp.'s PCS wireless unit has been a cash cow for its parent, too. Yet, WorldCom seems content to resell limited wireless-data services from financially hobbled Metricom Inc. and paging services from its SkyTel unit.

"Data, Internet, and international services are WorldCom's future," said WorldCom CEO Bernie Ebbers in a teleconference Thursday. He added that, "for the remainder of 2001, we don't see any storm clouds on the horizon--at this time." WorldCom's data and Net services brought in revenue of $2.8 billion in first quarter. International-service revenue grew 19%. Business-voice revenue makes up 28% of WorldCom's business-services group, down 5% from a year ago. Conspicuously absent from the WorldCom execs' remarks was mention of wireless voice or data.

WorldCom's quarterly results show operating costs are dragging on its revenue. Operating costs were $8.31 billion in the first quarter, up from $7.18 billion a year ago.

"Certainly, the numbers are better than anticipated and move WorldCom up a couple notches in the key area of viability as a domestic and global service provider," says Lisa Pierce, an analyst at Giga Information Group.

And give Ebbers credit for bucking a seemingly endless trend of execs blaming poor financials on the economy. "The methods we have established for disciplining ourselves in the pricing environment are beginning to yield results," he said, adding that calling prices have changed little after dropping for several years.