MCI WorldCom Second-Quarter Profit to Rise on Internet Sales
Bloomberg News
July 28, 1999, 5:58 p.m. ET
MCI WorldCom Second-Quarter Profit to Rise on Internet Sales
Clinton, Mississippi, July 28 (Bloomberg) -- MCI WorldCom
Inc., the No. 2 U.S. long-distance phone company, is expected to
boost second-quarter earnings on surging sales of Internet and
international services, analysts said.
MCI WorldCom is expected to earn 44 cents a share, the
average estimate of analysts surveyed by First Call Corp.
Estimates range from 42 cents to 46 cents.
MCI WorldCom is benefiting from early investments in the
Internet, as well as local and international markets, helping it
outpace sales gains at rivals AT&T Corp. and Sprint Corp. In the
first quarter, Internet, international and data services
accounted for 70 percent of the company's revenue growth, and the
company last month said it would spend about $1.4 billion in
proceeds from other asset sale to beef up its systems in those
markets.
''It'll be a solid quarter,'' said Michael Funsch, an
analyst at Independence Investment Associates in Boston, which
owns about 6.85 million MCI WorldCom shares. ''They have the
lead, and they're extending it.''
MCI WorldCom is expected to release its second-quarter
results tomorrow before the start of trading on U.S. exchanges.
The Clinton, Mississippi-based company's shares, which have
climbed about 21 percent so far this year, fell 1 to 86 11/16.
Falling Prices?
To be sure, some analysts and investors questioned whether
the company will suffer from falling prices for wholesale voice
services to other phone companies. Last month, No. 5 long-
distance provider Frontier Corp. warned it won't meet
expectations for second-quarter and 1999 earnings because of
lower prices for long-distance services.
Others weren't so concerned.
''MCI WorldCom will hold its own,'' said Tod Jacobs, an
analyst at Sanford C. Bernstein & Co., who has an ''outperform''
rating on the company. ''The wholesale business has become a
small enough piece of the overall pie that it's not in a position
to derail the company.''
MCI WorldCom is benefiting from surging demand worldwide
from multinational customers that want a single provider to
connect offices around the globe.
In addition to an update on international, Internet and
local phone investments, analysts are expecting more information
on MCI WorldCom's progress in the wireless market.
The company in May backed out of talks to buy nationwide
cellular provider Nextel Communications Inc. for about $17
billion and a few weeks later said it would buy No. 2 U.S. paging
company SkyTel Communications Inc. for about $1.8 billion.
MCI WorldCom is also buying several wireless cable-
television providers, including CAI Wireless Inc., to deliver
high-speed data services.
The company's year-earlier results will be stated as if its
$47 billion purchase of MCI Communications Inc. and other
acquisitions were completed. |
