MCI WorldCom (WCOM)

1) Are the numbers good?

For the most part, the quantitative data for WCOM looks good. Their EPS

has increased in the past few years and their expected EPS is predicted to

rise. Furthermore, their P/E ratio is competitive within its own sector.

Perhaps what is most impressive is their relative high cash flow.

CURENT PRICE: $74 & 9/16

EPS 1998A: $0.67 1999E: $1.9 2000E: $2.85

P/E 116.2X 39.5X 27.3X

Q3 EPS $0.19 $0.54

Cash Flow/Share $2.80 $3.98 $5.04

2) Who are their competitors?

MCI WorldCom's main competition are: AT&T, BellAtlantic, BellSouth, as

well as many smaller fringe firms.

3) What is their position in their industry?

Next to AT&T, WCOM has the second highest market share in the long

distance supplier industry. Currently, AT&T has about 60% market share

compared to WCOM with 30% (with the addition of the buyout of Sprint).

4) What are their new products/services being offered?

MCI WorldCom is constantly competing with AT&T for market share by

establishing new long distance packages. Currently, they are offering

$0.05 weekends and evenings and continue to have new services formed.

Also, WCOM recently signed an agreement with Cybertel Communications to

originate and terminate long distance and data traffic on MCI WorldCom's

worldwide fiber optic network.

5) What are some of their marketing strategies?

WCOM has spent extensive investments in advertising to persuade customers

to switch long distance carriers. Again, they are offering $0.05 weekends

and $0.05 weeknights to lure prospective customers.

6) Where do you think the industry as a whole is heading?

Besides being a long distance supplier, the industry is moving towards the

cellular and wireless markets. I envision future agreements with more

internet servers to make both industries more efficient and profitable.

7) What is the company's strength?

WCOM has demonstrated tremendous growth in the telecommunication sector

that reflects strong management. Furthermore, with the recent acquisition

of Sprint, WCOM displayed a high cash flow in a time of need or a time of

growth opportunities. Also, WCOM expects to have 31.8% growth over the

next five years which completely exceeds the benchmark of 20% growth.

8) What is the company's weakness?

Earnings are the most pivotal aspect when investing in a stock. One

weakness in World Com is that their actual earning is not as good as their

potential earnings which is what has been driving the stock over the past

8 months.

9) What is your buy opinion in the next six months?

MCI WorldCom is a strong company that has been well established within its

market. Quantitatively, it is the head of its class within their

industry. MCI WorldCom is a promising investment in the long run, but I

wouldn't invest in WCOM in the short run or in the practice of profit

taking. I expect it to continue to trade sideways for the next few months

before it will increase. Therefore, in our time span, I would hold off on

buying WCOM.

10) What is a buy/sell trigger?

Third quarter earnings are due on October 28. If it does not meet the

street estimates, I definitely would stay away from this stock and sell

it. On the other hand, if WCOM demolishes the street estimates, I would

definitely consider accumulating this stock into our portfolio.