Struggling WorldCom Inc. will cut about 2,000 jobs in its Europe, Middle East and Africa (EMEA) unit and discontinue some niche services in a bid to make the business cash flow positive by next year, the company said Monday.
A new business plan has been developed for the EMEA arm of WorldCom, headquartered in Reading, England. In addition to cutting about 25 per cent of its 8,300 jobs, the business will make minimal new infrastructure investments and focus on voice, data and Internet services, WorldCom said in a statement. The bulk of the 8,300 people work in England, WorldCom said.
The international arm of WorldCom also secured funding from its parent until it becomes cash flow positive sometime in 2003, the company said. The funding should ease customer concerns and end speculation of a sale of the EMEA business, WorldCom spokeswoman Rachel Richards said.
“The funding is very comforting for the European operation,” she said, adding that the company is not seeing “any significant customer loss” in Europe and is in fact adding new customers.
One of the “unprofitable niche” services WorldCom will likely discontinue is “Ship Direct,” a one-stop-shop service for customers who want to buy network equipment, Richards said. WorldCom will stop reselling such equipment, she said.
“Our administration costs no longer justify us offering the service,” she said.
Richards declined to specify what other products and services may be cut, saying only that “there are not very many of them” and that new customers will likely be the only ones affected by the measures.
“All current contracts will be honoured. It is likely that we will not offer these peripheral products and services to new customers only,” she said.
Richards also stressed that the restructuring does not mean WorldCom will pull out of any geographic region it currently offers services in.
WorldCom of Clinton, Mississippi, filed for Chapter 11 bankruptcy protection in the U.S. in July. The company in June revealed that it had accounted improperly for billions of dollars in revenue. Several of its former executives have since then been indicted on securities fraud and other charges. On Friday, it disclosed plans to hunt for a chief executive officer (CEO) to replace John Sidgmore, who was named president and CEO in April.