Surging revenues from voice, data and Internet services helped telecommunications giant MCI WorldCom
post earnings that met Wall Street's expectations.
In its first quarter since it acquired MCI Communications, WorldCom posted third-quarter revenues of $3.8 billion, a 97 percent increase over the year-ago quarter. The company cited strong internal growth coupled with the benefits of the MCI transaction and another smaller acquisition for the year-over-year doubling of reported revenue.
Shares of MCI Worldcom dipped in early trading despite the earnings news. The stock was down just more than 1 percent to 53.5, and has traded as high as 57.88 and as low as 28 during the past 52 weeks.
Excluding charges, WorldCom said it generated net income of $268 million, or 21 cents per share, meeting analysts' expectations, according to First Call. The company posted net income of $69 million or 7 cents a share for the year-ago quarter.
MCI WorldCom said that communications services revenues, which comprises voice, data, international, and Internet, increased 19 percent on a pro forma basis to $7.3 billion. Traffic, on a pro forma basis, increased 18 percent year-over-year.
Data revenues increased 33 percent to $1.5 billion for the quarter, while Internet revenues increased 72 percent to $589 million. Data network requirements are becoming more strategic with customers looking for ubiquity and reliability from network providers, the company said.
During this earnings season, many telcos have reported positive earnings, primarily citing strong growth in their data and Internet services.
Rapidly growing demand for high-speed data access as well as data transport is driving local data revenue growth of more than 40 percent.
Voice revenues were the biggest gains, representing 64 percent of total revenues, and growing 10 percent to $4.9 billion.
"The acceleration in our year-over-year pro forma revenue growth is in spite of a competitive voice market and underscores the value of our investments in the fastest growing segments of the market," Bernard Ebbers, president and chief executive officer of MCI WorldCom, said in a statement. "This is positively impacting our performance, as well as the success of our combined sales force in boosting traditional revenues."
Pretax merger related charges of $3.3 billion were taken in the third quarter, according to the company. This includes the previously announced $3.1 billion of in-process research and development. In addition, the company recorded a $184 million pretax charge relating to MCI merger activity.
"After culminating almost a year's effort to complete our merger, MCI WorldCom's outlook is particularly bright," said Ebbers. "Energy is now being harnessed much more productively around our customers' needs, rather than the merger approval process."