WorldCom Considering 16,000 Layoffs

The layoffs would be the second round this year for WorldCom, which is facing $30 billion in debt. In April, the Clinton, Miss.-based company said it was eliminating 3,700 U.S. jobs to better align costs with projected revenue. Those cuts were limited to WorldCom Group, which includes the high-growth data, Internet and international businesses.

It wasn't clear where the next round of job reductions would take place.

The company official, who spoke on condition of anonymity, confirmed the cuts, first reported Wednesday by USA Today.

WorldCom spokeswoman Claire Hassett would say only, "We're certainly going to right-size the business, but to speculate on details would be premature."

Earlier this year, WorldCom scaled back 2002 sales and profit projections but said it still expected to generate $1 billion in free cash flow from operations.

Analysts say achieving that goal is vital to the company meeting its financial obligations. The cuts seem to signal that the company's Internet, data and long-distance businesses are deteriorating more severely than anticipated, analysts said.

"That level of cuts seems fairly alarming," said Drake Johnstone with Davenport and Co. in Richmond, Va. "If the company's projections were accurate or close to the mark, that type of cut would not be needed."

WorldCom also is the nation's second-largest long-distance provider, which it operates through its MCI Group.

Industry observers have expected significant changes in the company under new chief executive John Sidgmore, who replaced ousted WorldCom founder Bernie Ebbers on April 30.

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Sidgmore immediately began a major review of all operations and said he'd likely raise cash by selling assets and cutting capital expenditures by $1 billion this year.

Some decisions already have been made. Three weeks ago, WorldCom said it was eliminating its MCI tracking stock, which will save the company more than $284 million a year in dividend payments. WorldCom and MCI shares will recombine after trading July 12.

This week, the company sold a business unit for $32 million that offers managed data and Internet services to office buildings.

Sidgmore has said WorldCom also will consider selling its interest in Latin American phone businesses and other units.

WorldCom has said it expects to arrange a $5 billion credit line this month, which it hopes will renew investor interest until business rebounds.

WorldCom shares have lost 90 percent of their value this year amid concerns about debt and a Securities and Exchange Commission investigation of lending and accounting practices.

In early afternoon trading Wednesday on the Nasdaq Stock Market, WorldCom Group shares were off a penny to $1.45. MCI Group shares also were down a penny to $2.54.