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To: djane who wrote (45261)	4/24/1998 1:04:00 AM
From: djane	Read Replies (1) \| Respond to of 61433

WorldCom Posts a Loss, But Its Revenue Soars By JOHN J. KELLER, 4/24/98 Staff Reporter of THE WALL STREET JOURNAL interactive.wsj.com WorldCom Inc. posted a $409.1 million first-quarter loss due mostly to charges for recent acquisitions, but revenue and traffic from the company's local, long-distance and Internet units soared. The Jackson, Miss., telecommunications company, which plans to complete its $37 billion purchase of MCI Communications Corp. sometime this summer, is far outpacing AT&T Corp. and other service rivals, judging by the numbers. The extraordinary growth in WorldCom's Internet business in particular could fuel further protests from rivals such as GTE Corp. that complain WorldCom is gaining too much control over Internet traffic world-wide, especially once it completes its takeover of MCI. The loss in the quarter amounted to 41 cents a diluted share after a charge of $602 million, or 59 cents a share. This compared with a profit of $25 million, or two cents a share, a year ago. Minus the charges, net income would have been far higher, rising to $193 million, or 18 cents a share, a penny more than the First Call consensus of analysts. Revenue grew 38% to $2.35 billion from $1.7 billion and would have been higher were it not for WorldCom's sale of its operator services and broadcast operations last year. By contrast, the nation's biggest carrier, AT&T, had flat first-quarter revenue because of a continued decline in its consumer revenue and lower fees paid to local phone companies, which drove down the prices charged by AT&T and others for completing long-distance calls. "Our revenue growth is coming from three of the fastest-growing areas in the industry: Internet, international and local," said WorldCom Chairman Bernard J. Ebbers in an interview. "It's allowing us to build on previously successful quarters with growing momentum." Investors agreed. Thursday they pushed up WorldCom's stock 75 cents to $44.375 in heavy trading on the Nasdaq Stock Market, even though the overall market fell almost 2%. But Mr. Ebbers still faces a tremendous integration job: WorldCom must meld numerous acquisitions to get the $2.5 billion of initial annual cost-savings it promised investors when it announced the MCI acquisition, telecom's biggest deal yet. That may be one reason why Mr. Ebbers is holding off on adding one more crucial bullet to his gunbelt: wireless services. WorldCom's big rivals have cellular services, but Mr. Ebbers doesn't see anything out there that is growing enough to warrant buying. "A few years ago, that business was growing 30% or more, and now it's in the low teens to 10 or less," he says. "Wireless is something we'll take a look at, but it will be three or four years down the road." Charges in the quarter included $429 million, or 42 cents, for research and development projects that were in process at two recent WorldCom acquisitions, the network services units of American Online Inc. and CompuServe Corp. Charges also included $44 million, or four cents a share, for the Brooks Fiber acquisition and another $129 million, or 13 cents a share, for the retirement of Brooks's high-yield debt. WorldCom's traditional long-distance and local services, what WorldCom calls "switched" network services, continued to show strong growth with revenue of $1.16 billion, a 21% increase -- far more than the industry's 6% to 10%. Even bigger spikes in WorldCom's revenue growth came from three of its newer businesses -- Internet, international and private -- line [data] services. Internet revenue grew 82% to $392 million, helped by the recent acquisitions of AOL's and CompuServe's network-services businesses. International revenue rose 59% to $259.7 million, reflecting increased usage of new facilities such as a transatlantic cable linking directly 4,000 buildings in Europe with 27,000 buildings in the U.S., WorldCom said. The company also is racing furiously to build local networks in Europe that will carry local traffic from business customers directly to the WorldCom long-distance network, cutting out incumbent national carriers. Private-line services revenue grew 38% to $496.4 million. --Shawn Young contributed to this article. Return to top of page Copyright c 1998 Dow Jones & Company, Inc. All Rights Reserved.