WorldCom Inc. is planning to lay off an additional 1,700 employees, about 3 percent of its workforce, during the next two weeks, sources confirmed yesterday.
The layoffs will happen just weeks before the Ashburn-based telecommunications company is expected to emerge from bankruptcy protection.
It was not clear yesterday how the workforce reduction would affect employees in the Washington area. One source said the reductions are likely to be distributed throughout several divisions in the company's U.S. operations. WorldCom currently has 55,000 workers, about 4,000 of whom work in this area, mostly in Ashburn.
WorldCom filed for bankruptcy protection in July 2002 after revealing massive accounting fraud. During the past 18 months, revenue has steadily declined as WorldCom, along with its long-distance rivals, has faced increased competition from wireless carriers and large local phone companies that have won permission to enter the long-distance industry.
The company already has cut more than 22,000 jobs since filing for bankruptcy protection. Most recently, it laid off 5,000 people, primarily in corporate and administrative staff, last February.
The telecommunications giant is still working to complete financial restatements for the three-year period beginning in 2000 during which it improperly accounted for $11 billion. But during the last 18 months it has been required to post monthly revenue statements with the bankruptcy court.
According to the most recent revenue statement released by the company, WorldCom lost $194 million in October on revenue of $1.97 billion. The company continues to post losses even though it is not required to make interest payments while it is in bankruptcy protection.
Despite the slipping revenue, WorldCom has succeeded in building up its cash position. It currently has more than $5 billion in cash, up from approximately $200 million when it filed for bankruptcy.
WorldCom spokesman Brad Burns said yesterday that new layoffs are part of a cost-cutting effort.
"Of course, we are always looking for ways to better align our costs with revenues. Unfortunately, workforce reductions have to be considered but they are a last resort," Burns said. However, Burns declined to comment on details of the plans to cut workers.
WorldCom is already doing business under the name of its better-known long-distance subsidiary, MCI. The name change will become official when the company emerges from bankruptcy, a process that must be completed by Feb. 28 under a plan of reorganization approved by U.S. Bankruptcy Judge Arthur J. Gonzalez in New York.