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ASHBURN, Va. - Like a racehorse too old to run, WorldCom's traditional voice business is being turned out to pasture these days as the company tries to reinvent itself as "Generation D"-a digital, Internet Protocol-based data and communications player.
That was the message during the recent WorldCom executive forum at its complex here, where WorldCom brass repeatedly emphasized to decidedly skeptical journalists and analysts that the company's main business quarry would be the high-growth data, hosting and virtual private network markets.
Long-distance voice service brought over from MCI will remain a part of the company's operation, but current plans to create a low-growth tracking stock for that business will put it far afield from WorldCom's new digital and data focus. In the next few years, voice will constitute only 26 percent of WorldCom's business in 2001, according to Ron Beaumont, chief operating officer.
"At the end of five years, we project that our voice will be around 15 percent or less of our revenue stream," he added.
To emphasize the point, WorldCom on the same day trotted out WorldCom IP VPN and WorldCom Private IP, part of a new suite of global IP networking services. The VPN product will offer secure networking services linking remote offices, while Private IP-which began last year as a business IP service-will use multiple-layer packet switching technology to better direct data information to clients.
The transition to data and Internet services will take time, especially when it comes to convincing investors of the new direction.
"We have set the table for Wall Street and told them what we are going to do, but it will take time to prove it in performance," Beaumont said. "You won't see a whole lot of change in our stock until we get a couple of quarters under our belt."
WorldCom's pending acquisition of Intermedia is aimed at acquiring a controlling interest in its Web hosting subsidiary, Digex Inc. WorldCom will keep Digex assets in areas where it does not have competing service, but in some cases there will be cutbacks.
"That's a case where we would look at each particular element of Intermedia's assets in their network and determine whether it complements what we have or whether it is something that duplicates and we'd either sell it off or shut it down," Beaumont said.
Though the executives repeatedly said the plan was clear, they were somewhat evasive when asked to provide revenue projections or market share goals. Beaumont told the crowd the revenue projections were handled in a November analyst conference, and even then the company did not break projections down by segments, including Web hosting, VPN or IP services business.
"What we talked about for the digital company is a growth rate in the double digits-it's in the lower end of the double digits, and we'll stick with that," Beaumont told the crowd.
Concentrating on Internet services does have its risks these days given the continuing Great Depression among dot-coms. "One trend, though, is inescapable, and that's how enterprises are using Web-based applications-not just for consumer to business applications but internally within enterprise," Beaumont says. "I do think, and I think many of you have written about, in the collocation space, the slowdown in the dot-coms is going to have an impact on collocation-based hosting. We don't believe it is going to have as dramatic an impact on managed and enterprise services, which is one reason we are focusing so heavily on that environment."
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