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| WorldCom Cuts 3,700 Jobs in Key Business -- Firm Cites 'Slowdown Of Revenue Growth' by Jeremy at 5:34 am EST, Apr 4, 2002 | |||
WorldCom ... laid off 3,700 employees yesterday, or 6% of workers in its data, Internet and international business unit ... as the company struggles with dramatically slowing sales growth in its primary business. ... [From Reuters: also halted salary increases, halted stock option grants, and eliminated free coffee!] WorldCom carries a hefty debt load, faces a federal inquiry -- two common problems in the industry ... MCI is run as a separate division ... no layoffs [yet] there ... [From Reuters: WorldCom recently got $800 million in cash by selling its stake in News Corp.] The growth rate of WorldCom's sales of data services has slowed to 16.7 percent last year from 26.7 percent in 2000, and the layoffs were a necessary adjustment to that, a WorldCom spokeswoman said. WorldCom [tried to focus on] Internet and data services to large businesses, [a sector which] took a dive [recently] "The revenue for what WorldCom provides is dismal, and it has been for several quarters." The company made its foray into the Internet business "at exactly the wrong time." [Any eventual] rebound is likely to be very gradual. MCI's business has also been eroding faster than expected ... If MCI cannot generate enough cash to pay interest on its debt, Worldcom may have to take MCI back, increasing its burden. We were expecting 7,000 layoffs; they must be holding out on us. It is quite curious to me that they would choose to lay off employees in the data and Internet unit, rather than in the voice business unit. Perhaps the details of the MCI spinoff put all of the voice-related employees out of Worldcom's reach. This is also the first mention (that I've seen) in the major news media of the severity of MCI's debt problems. | |||
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