WorldCom, owner of the largest network for carrying internet traffic, cut back its cash-earnings outlook for 2001 by as much as 22 per cent because of an accounting change for its investment in a Brazilian carrier and higher interest and depreciation expense.
WorldCom, which owns a 19 per cent stake in Brazil's largest long-distance telephone company, said it would no longer combine Embratel's financial results in its own.
Annual sales will be higher than expected, excluding the investment in Embratel, the company said.
Bernard Ebbers, president and CEO of WorldCom, said: "Embratel continues to play an important role in WorldCom Group's international growth strategy by extending our ability to offer global customers services throughout the world."
Ebbers also said that continuing to consolidate Embratel's financial results was causing undue confusion in the market.
That change, as well as its recent sale of debt, the acquisition of Intermedia Communications, and increased depreciation, will cut the cash earnings for the company's WorldCom Group unit to $1.05 to $1.10 a share compared with a previous forecast of $1.25 to $1.35, the company said.
The WorldCom Group includes the company's core data and internet operations.
Full year revenues for the WorldCom Group will increase 12 to 15 per cent, compared with previous forecasts of 11 to 14 per cent.
The company reaffirmed that cash flow, or earnings before interest, taxes, depreciation and amortisation, will be in the range of $7.8m to $8.3bn.
For the second quarter, WorldCom Group's revenues will increase 11 per cent to 13 per cent and will be in the range of $5.3bn to $5.4bn, which the company said was in line with Wall Street's consensus.
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