MCI WorldCom preparing big wireless bid?

CEO Bernard Ebbers may be preparing Wall Street to accept a possible wireless phone acquisition that may be more expensive than planned.

John Borland Staff Writer, CNET News.com
John Borland
covers the intersection of digital entertainment and broadband.
John Borland
2 min read
MCI WorldCom CEO Bernard Ebbers may be preparing markets to accept a possible wireless phone acquisition that may be more expensive than planned.

The company has been negotiating a possible acquisition of wireless phone operator Nextel for at least several weeks, but has been deadlocked over price, according to reports first carried in the Wall Street Journal.

Ebbers has long been publicly hostile to purchases that would significantly dilute his company's earnings. Even while analysts have said MCI WorldCom badly needs a wireless phone division to stay on par with competitors like AT&T and Sprint, Ebbers has shied away from bidding on expensive properties like AirTouch Communications.

But in a conference call with financial analysts today, Ebbers appeared to be paving the way for a purchase that could eat into the company's bottom line in the short term.

During the call, Ebbers said he would not directly address press reports of company activity outside its current "core communications services."

But he did offer several unsolicited comments about the company's strategic direction, in which he softened his earlier insistence on short-term as well as long-term gains from acquisitions.

"We will definitely look at opportunities that will make the company stronger over the long term," Ebbers said. "Shareholders should not be uncomfortable with that attitude."

All of the company's executives, including Ebbers, have much of their net worth tied up in MCI WorldCom stock, the chief executive told analysts. If only for selfish reasons, he said, "We would not enter into a transaction that we did not feel was in the best interests of the company over a long period of time."

Nextel is the last remaining independent wireless phone firm that has a national footprint. It is still building out its network, however, and has considerable debt and a negative earnings flow.

The company is worth about $10.8 billion at today's share prices.