WorldCom's plan to emerge from Chapter 11 next week is on track, judging by the word going out to telecom insiders.
Chief Michael Capellas, who took over the No. 2 long-distance company in November, is calling a number of industry consultants and analysts to an informal gathering Thursday at the company's Ashburn, Va., offices.
The analysts -- who agreed to a gag order -- will get a first look at WorldCom's business plans and will likely be asked to offer feedback to help Capellas fine-tune the next stage of his turnaround message. The company is expected to seek approval for its reorganization plan sometime around April 15.
If the outlook seems surprisingly bright for WorldCom, the company's apparent progress doesn't bode well for rivals such as
. The industry's fortunes have flagged over the last three years amid a stubborn glut of communications network capacity, and the appearance of a robustly reconstituted competitor could put further pressure on already falling prices.
Some analysts who plan on attending the briefing say they expect to hear an update of how WorldCom is performing. Few expect any big surprises. "I seriously doubt we'll hear that Capellas has decided to step down or anything like that," said one analyst who plans on attending the meeting and asked not to be identified.
WorldCom collapsed last summer after a series of revelations about its bookkeeping. The company fired founder and CEO Bernie Ebbers just months before it filed for the largest-ever U.S. bankruptcy. To date, the company has fessed up to nearly $10 billion in accounting misdeeds.
Under Capellas, the former CEO of Compaq, WorldCom has swallowed an
$80 billion writedown to shrink its balance sheet while undertaking some drastic payroll-trimming measures. Lately, though, the company has shown surprisingly swift progress on the financial front. WorldCom
swung to a profit in January, posting net income of $155 million on revenue of $2.17 billion. That compares to December's $580 million loss on $2.2 billion in sales.
All eyes in the battered telecom industry will be on WorldCom's postbankruptcy performance. With its once-heavy debtload having been reduced substantially, WorldCom looks like a leaner and more formidable competitor than ever -- a scary prospect for an industry beset by instability.