, the world's second-largest long-distance company, today beat Wall Street's quarterly earnings expectations as data, Internet and international communications services showed strong growth.
Shares of WorldCom rallied 7% after the company, which has agreed to acquire No. 3 long-distance provider
, said third-quarter earnings came in a penny ahead of Wall Street estimates. More than 75% of revenue growth came from data, Internet and international communications services, while revenue from traditional long-distance voice service grew only 6%.
"The long-term trend across the industry and at MCI WorldCom in particular is shifting from plain old voice minutes to data and Internet traffic, and that really started showing up in their bottom line," said
analyst Mel Marten, who rates the stock a strong buy. The firm hasn't done any underwriting for WorldCom.
For the third quarter ended Sept. 30, the company reported net income of $1.1 billion, or 55 cents a diluted share, on revenue of $8.5 billion. For the year-ago quarter, earnings were $359 million, or 19 cents a diluted share, on revenue of $7.3 billion. Analysts surveyed by
First Call/Thomson Financial
expected the Clinton, Miss.-based company to earn 54 cents a share.
Charles DiSanza, who covers the stock for
Gerard Klauer Mattison
, said the revenue growth shows the company is moving to become a full-service company again after several quarters of focusing mainly on corporate customers. Even the lingering debt from the
deal hardly seems to matter to shareholders as the company and its revenue growth balloon, said DiSanza, who upgraded the stock to a buy just days before the $115 billion Sprint merger was announced.
"This company's so large now that even a half-billion-dollar problem is not that important," said DiSanza, whose firm hasn't done underwriting for the company. With Sprint on board, "We think it will be a great collection of businesses." The company is focusing on selling bundled packages of services, like On-Net Services, which can include paging, conferencing, Internet and intranet services, to business clients, Bernard Ebbers, president and CEO, said in a statement.
The early success selling those services "underscores the customers' desire to purchase 'all-distance' services from one provider," Ebbers said.