MCI Group fizzles in trading debut
Shares of MCI Group, the tracking stock for WorldCom's wholesale and consumer long-distance business, trim 12 cents to $18.30 in their trading debut.
The tracking stock was created Thursday when the telecommunications company restructured its business units to create two separate tracking stocks, MCI Group and WorldCom Group. The separation gives shareholders an opportunity to invest in either WorldCom's growing data and Internet business or MCI's struggling long-distance business.
"Frankly, I'm surprised the stock's holding up above $18," said Patrick Comack, an analyst at Guzman & Co. "If I were an investor, I'd want to get more than a 13 percent yield from a company that's going to see its revenue base and profits declining significantly in the next two years."
In its most recent quarter, WorldCom posted a profit of $729 million, or 25 cents a share, on sales of $9.7 billion, down from $1.28 billion, or 44 cents, in the year-ago quarter.
Other telecommunications giants, including Sprint and AT&T, have employed similar tactics of late, separating their wireless and Internet businesses from their core long-distance businesses.