RealTime IT News

WorldCom Lays Off 4 Percent

WorldCom Inc. Wednesday laid off 3,700 of its U.S.-based positions, about 4 percent of the company's overall workforce.

The cuts came entirely from the WorldCom Group unit, and did not affect the MCI Group.

WorldCom cited the need to align its costs with projected 2002 revenue guidance of mid-single digit growth as the reason for the cuts.

The telecom, struggling with difficult industry conditions and a U.S. Securities and Exchange Commission probe into its accounting practices, already laid off 9,000 workers last year. Its stock fell to a low of $6.78 per share Tuesday off its 1999 high of $64.50.

The company said it will offer severance packages based on duration of service to the laid-off employees. Reports have suggested the severance packages will range from six weeks salary to six months, depending on seniority.

The company has forecast low revenue growth this year, and some analysts have suggested it may even have trouble hitting those targets. WorldCom's position raises the possibility of further layoffs in both the core WorldCom Group unit and MCI Group.

In related news, WorldCom said Wednesday that its MCI subsidiary excised its option to call and redeem $700 million 6.125 percent notes, which were due April 15, 2012. WorldCom said it will use cash to retire the notes.

"WorldCom's decision to retire the notes reflects the company's strong liquidity position and positive free cash flow," said Scott D. Sullivan, WorldCom's chief financial officer. "The repayment of these notes is consistent with our stated objective of reducing overall debt."

The company said it had more than $2.2 billion in cash and cash equivalents as of March 31.