However, shares in the US telecommunications company remained largely unchanged as it left its forecasts for 2001 revenue and ebitda intact.
WorldCom had earlier estimated that cash earnings per share – a measure that does not include the impact of goodwill amortisation – would reach $1.21-$1.31 this year excluding its Brazilian unit, Embratel.
Higher depreciation and interest costs would now push that figure down to $1.05-1.10, it added. The change reflects a number of factors, including the recent acquisition of Intermedia, a troubled local carrier, and a large bond issue earlier this year.
Since Wall Street has come to value WorldCom on the strength of its Ebitda rather than reported earnings per share, the cut wasn’t likely to make much impact on investors’ views about the company, said Adam Quinton, telecoms analyst at Merrill Lynch. WorldCom reiterated its forecast that Ebitda for this year would be $7.8-8.3bn.
At the same time, the company slightly raised its revenue forecasts, lifting its target growth rate for this year from 11-14% to 12-15%.
The adjustments came as WorldCom announced a restructuring of its ownership of Embratel that would remove it from the company’s consolidated figures. With the Brazilian currency under pressure, the change will have the effect of removing a negative factor from WorldCom’s numbers. In a statement to the press, Bernie Ebbers, WorldCom CEO said the change had been made because the inclusion of Embratel was causing undue confusion in the market.
Though it only has a 19 per cent economic interest in Embratel, WorldCom has a majority voting stake, forcing it in the past to consolidate the business.
