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By Ben King, 17 June 2002 17:30

NEWS Despite its plunging share price, the sacking of its CEO amid financial scandal and rumours of imminent job cuts things are going swimmingly for WorldCom, according to their senior VP for EMEA Lucy Woods. CEO Bernie Ebbers stepped down in April after a controversial $408m (£276m) loan package aroused shareholder ire. The company's share price is 90 per cent down on a year ago, and job cuts are looming, but Woods claims "WorldCom's performance hasn't fundamentally changed" and it's still on course for profit. WorldCom's strategy is to go back to business basics and only chase after business that will make money. It's not a particularly revolutionary strategy, but for a long time it has not been the fashion in the alternative carrier business. Until recently, most of the companies in the sector were chasing revenues at any cost, and not worrying about how much money they made or lost on each transaction. Hence the speed with which KPNQwest went from making a profit before tax, interest and debt amortisation at the end of 2001, to going bankrupt mid-2002 - it built up revenues without making any real money. Woods said: "We started to restructure in 2000 - earlier than the others. From then on we concentrated on building strength into the profit and loss account. So we didn't grow as much as we wanted to last year, but we improved profit and loss. "The pressure on people to deliver that revenue growth was tremendous. So there's a temptation to take business that isn't going to take you anywhere. "Some of the smaller players would go in [to a deal] at any price. But we have been turning down a lot of business where the margin isn't big enough." Of course, one of the surest ways of improving the profit and loss account is to cut costs, which usually means cutting jobs. Last week John Sidgmore, who took over as CEO after Ebbers stepped down, confirmed to the Wall Street Journal that the persistent rumours of imminent job cuts were likely to be proved true. But if WorldCom can balance those job cuts with consistent revenue growth, the company has a good chance of pulling through. So WorldCom is focusing on stable and reliable business areas, says Woods, such as the retail market, rather than the wholesale market which caused companies like Global Crossing so much trouble. Instead they are focusing on markets like IP-based Virtual Private Networks, which is showing excellent growth, Woods said, despite the fact that it brings in comparatively modest revenues. In particular, says Woods, WorldCom has tried to avoid some of the dodgier revenue-boosting tricks, such as 'hollow swaps', which saw companies exchange fibre capacity with each other. "We haven't done swaps for a long time," says Woods. Nonetheless, the company is under investigation by the US stock exchange regulator, the SEC, for the Ebbers loan and some of its other accounting practices. However, the trouble that the sector as a whole is suffering has helped WorldCom to pick up customers, as rivals like KPNQwest go under. Says Woods: "Like most of our competitors we put together our team to target KPNQwest. We've been picking up a lot of business from them in the past couple of weeks." Woods wouldn't be drawn on when the business would actually make it into profit - with the telco market in its current state, it's perhaps an unfair question. She says: "Over the next 6-8 weeks, we are going to work on a growth strategy. We talk all the time about relative targets. But everybody knows what good business looks like." "I'm not going to make any forecasts, but we're close to the business plan that we set ourselves. New customers are choosing WorldCom every day." WorldCom is believed to have enough money to stay alive for a while, but the long-term financial position remains uncertain. It's currently having trouble negotiating a $5bn (£ 3.38bn) credit facility, which is expected to be closed by the end of June. Woods is under no illusion about what a difficult patch the business is going through at the moment. But if they can hold on long enough, it should get easier. "We don't have to win any race," says Woods. "We just have to be the last one standing."