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To: Lizzie Tudor who wrote (59144)	4/27/2002 9:08:33 PM
From: puborectalis	Respond to of 77400

WorldCom May Face Loss of Corporate Customers, Analysts Say By Dana Cimilluca Clinton, Mississippi, April 27 (Bloomberg) -- WorldCom Inc. had $82 million in sales disappear in the first quarter as customers defected, and may lose other corporate clients amid investor worry that the company will be unable to repay debt. Dow Chemical Co., PricewaterhouseCoopers LLP and other customers canceled service from the second-biggest U.S. long- distance phone company, Chief Executive Bernard Ebbers said on a Thursday investor call. With $3.4 billion of bonds maturing in the next 18 months and $2 billion of payments looming, WorldCom may need to turn to its banks to meet obligations, investors said. ``The real risk is that customers who absolutely rely on telecommunications services for their own survival may not be willing to take a chance on a vendor that they believe might not be able to service them,'' said Dean Gekas, an analyst at State Street Corp., WorldCom's sixth-biggest stockholder in December, with 67.3 million shares. WorldCom reported its seventh consecutive drop in quarterly income on Thursday and sales tumbled 7.8 percent to $8.12 billion. Shares of WorldCom's data unit are down 77 percent this year to a 10-year low, with its bonds trading near distressed levels. In an e-mail message, Gekas said WorldCom's data service rivals such as Global Crossing Ltd. were able to retain many customers after seeking bankruptcy protection. ``We are holding our customer base,'' Ebbers told investors. WorldCom's defections in the quarter were about unchanged from a year earlier, he said. PricewaterhouseCoopers switched to Sprint Corp. because it is the auditor for the third-biggest long- distance operator, Ebbers said. A spokeswoman wasn't available to elaborate. `Radar Screen' Shares of the WorldCom Group data operation fell 26 cents, or 7.4 percent, to $3.27 yesterday and slid as low as $3.21 during trading. The company's 7.5 percent notes maturing in 2011 have fallen to 57 cents on the dollar, for a yield of 17 percent. Shares of the MCI Group consumer operation fell 48 cents to $4.25. Its dividend yield has soared to 56 percent. The Nasdaq Stock Market, which awarded WorldCom's MCI unit a $600 million contract in 1997 to boost trading capacity, is monitoring the company's financial situation, a spokesman for the exchange said. ``It's one thing that's on our radar screen,'' said Michael DeMeo. ``Our network is our top priority.'' WorldCom provides Nasdaq with the network to send information on stock trades, and helps the exchange manage about 30 Web sites, DeMeo said. He declined to discuss contingency plans or Nasdaq's financial arrangement with WorldCom. Ratings Reduced Moody's Investors Service Inc. and Standard & Poor's Corp. lowered WorldCom's debt to two levels above junk during the week and said an additional downgrade is possible. A rating below investment grade may trigger the repayment of $2 billion in securities backed by WorldCom customers' bills. WorldCom has said it's renegotiating terms. WorldCom, with $30.2 billion in debt in March, last week reduced its sales forecast for 2002 to $21 billion from as much as $22.6 billion and said it will cut spending amid reduced demand from corporations for phone and data services. The U.S. Securities and Exchange Commission is probing the company's accounting methods and loans to Ebbers. ``I'm sure there are a lot of conversations that are taking place between (the phone company) and customers that are expressing concerns over WorldCom's health,'' said Sandra Palumbo, an analyst at researcher Yankee Group. The Clinton, Mississippi-based company has $2.3 billion in cash and expects to make another $1 billion from operations. It will have access to $4.25 billion in unused bank credit.