WorldCom Inc. will divide itself into two separate stocks starting today as part of a restructuring aimed at isolating its shrinking long-distance business and shoring up its sinking stock price.
The plan, which was approved Thursday by WorldCom shareholders, creates two tracking stocks, one tied to WorldCom's high-growth data and business services units and the other to its cash-rich but stagnant consumer communications businesses.
The new structure is designed to give the operations greater focus and to give shareholders two "compelling investment opportunities," said Bernard Ebbers, chief executive of Clinton, Miss.-based WorldCom.
A new MCI Group stock will begin trading today on Nasdaq under the symbol MCIT. Its operations include MCI WorldCom, the nation's second-largest long-distance company, the SkyTel paging service and the consumer dial-up Internet service.
The rest of the company will keep the WorldCom name and the fastest-growing operations, including an extensive data communications network and international holdings, as well as its corporate Internet, telephony and data services. Shares of the new unit, called WorldCom Group, will be traded under the symbol WCOM, the same as the old WorldCom ticker symbol.
MCI Group accounted for 42% of WorldCom's $39 billion in sales in 2000; WorldCom accounted for 58%.
Ebbers built WorldCom with 75 acquisitions in 15 years, including the $47-billion purchase of MCI Communications Corp. in 1998. Now he's breaking it apart to quarantine the long-distance unit, which is facing poor prospects after Ebbers' bid for Sprint Corp. failed and long-distance prices fell as low as 2 cents a minute, analysts said.
Each WorldCom Inc. share will be converted into one share in the new WorldCom Group and 1/25th of an MCI Group share.
MCI Group will pay a quarterly dividend of 60 cents a share. WorldCom Group, which won't pay a dividend, includes 70% of the former MCI's assets.
On the company's last day of trading as a combined entity, WorldCom shares closed up 5 cents to $18.42. The stock is down more than 60% from its 52-week high of $49.97 last June.
Standard & Poor's said this week that WorldCom Group will remain in the S&P; 500 index, but that MCI Group won't.
Bloomberg News was used in compiling this report.