MCI Worldcom Inc. (Nasdaq: WCOM) slid by estimates in its first quarter Thursday, pulling in 44 cents a share on booming revenue due to growth in data, Internet and international revenue and declining access and technology costs. First Call was expecting a profit of 43 cents a share.
Shares in the telecommunications company, which is slated to close its merger with Sprint (NYSE: FON) in the second half of 2000, closed at 40 7/8, well below their 52-week high of 59 3/8. Sprint, which also topped estimates in its first quarter, closed at 59 3/8.
The merger, announced October 5, will improve MCI WorldCom's standing against the other big telecom players such as AT&T (NYSE: T) and Baby Bells such as Bell Atlantic (NYSE: BEL), which will merge with GTE Corp. (NYSE: GTE), and SBC Communications (NYSE: SBC).
WorldCom will hold a special meeting of shareholders on Friday to vote on the Sprint merger.
For the quarter ending March 31, earnings before goodwill amortization (cash earnings) increased 59 percent year-over-year to $1.6 billion, or 54 cents a share. Net income increased 80 percent to $1.3 million, or 44 cents a share.
Excluding WorldCom's interest in the Brazilian telecommunications company Embratel, revenue was $9.2 billion, a year-over-year increase of 14 percent, or $1.1 billion. Including Embratel, revenue was $10 billion
Communications services revenue, net of voice access costs, increased 19 percent year-over-year.
Data, Internet and international revenue was the fastest-growing business, up 32 percent from the year-ago quarter to $4.6 billion, or 46 percent of WorldCom's total revenue.
Operating income grew 62 percent from the first quarter of 1999 to $2.4 billion with depreciation and amortization growing only 4 percent from that period. Gross margins increased by 4 percentage points year-over-year, generating $5.9 billion of gross profit. This represents 18 percent growth from the first quarter of last year.
During the quarter, WorldCom and America Online (NYSE: AOL) announced a five-year extension of their agreement for dial-up access services. WorldCom's subsidiary, UUNET, has been a provider for AOL for several years. Other accomplishements included a trial of next-generation optical networking equipment from Nortel Networks (NYSE: NT).
WorldCom said it expects continuing strong growth from data, Internet and international businesses in 2000.