WorldCom 2nd-Qtr Profit Rises Fivefold on Data Sales (Update1)
Bloomberg News
July 23, 1998, 12:55 p.m. ET
WorldCom 2nd-Qtr Profit Rises Fivefold on Data Sales (Update1)
(Adds analysts' comments in the 9th and 12th paragraphs.
Updates stock price in the 6th paragraph.)
Jackson, Mississippi, July 23 (Bloomberg) -- WorldCom Inc.,
the No. 4 U.S. long-distance phone company, said second-quarter
earnings rose more than fivefold, beating expectations, on
surging sales of Internet and other data services.
Net income rose to $227.5 million, or 21 cents a diluted
share, from a pro forma $41.6 million, or 4 cents, a year
earlier. Results are a penny above the average estimate of 20
cents a share from analysts polled by First Call Corp.
WorldCom's profit is soaring as companies turn to the
Internet for information and to conduct business, and as its
investments in high-growth international and local phone services
start to pay off.
''WorldCom is dedicating itself to the sweet spots of the
market,'' said Guy Woodlief, an analyst at Prudential Securities
Inc., who has a ''buy'' rating on the stock. ''There's nobody
that can compare with WorldCom in terms of growth.''
Meet '98-'99 Estimates
On a conference call with analysts and investors, WorldCom
Chief Financial Officer Scott Sullivan said he expects the
company to meet earnings estimates for 1998 and 1999, analysts
said. According to First Call Corp., WorldCom is expected to earn
89 cents a share this year and $1.96 in 1999.
Shares of WorldCom rose 2 1/8 to 56 7/16 in early afternoon
trading.
Sales rose 32 percent to $2.61 billion from $1.97 billion in
the quarter, on a pro forma basis, to include companies WorldCom
acquired during the past year. WorldCom's sales were quadruple
No. 3 Sprint Corp.'s 8.2 percent rate, and eclipsed No. 1 AT&T
Corp.'s lackluster 1 percent sales growth.
Sales from data services in the U.S. rose 41 percent, driven
by demand from Internet access and related services. Sales
specifically for Internet services rose 73 percent as more
business customers migrate their data networks to Internet-based
technologies, WorldCom said.
''They have a superior product line aimed at the most
attractive niche of the market,'' said William Vogel, an analyst
at NationsBanc Montgomery Securities, who has a ''buy'' rating on
WorldCom.
Record Highs
Sales from international services -- those that originate
outside the U.S. -- rose 52 percent, while U.S. voice-services
sales rose 23 percent.
Earlier this week, WorldCom unveiled a pan-European fiber-
optic network to take on British Telecommunications Plc and other
incumbent phone companies there.
''I'm predicting huge market share gains in Europe,'' said
Joseph Noel, an analyst at Hambrecht & Quist, who has a ''buy''
rating on WorldCom.
WorldCom shares have risen to record highs in the past month
after the U.S. Justice Department and European Union approved its
proposed $50.1 billion purchase of No. 2 long-distance company
MCI Communications Corp. WorldCom expects to complete the
purchase, the largest ever in the telecommunications industry,
later this summer.
''Our strong earnings are once again the product of an
organization focused on the bottom line and demonstrate a
proficiency at integrating merged companies,'' said Bernard
Ebbers, president and chief executive of WorldCom.
WorldCom shares have risen about 80 percent so far this year,
compared with a 27 percent gain at Sprint and a 6 percent slide
at AT&T.
--Andrew Brooks in the Princeton newsroom (609) 279-4066 with |
