Is this a running engine that you run regularly or is it one that has been left to sit up for a longtime and you're just now starting to mess with it? If it's been sitting a longtime, the compression may improve after you run it some. If it's one that's been running recently then I'd say it's worn out. You'll have to tear it down to see just how bad. You can also perform a leakdown test, but I'd say that effort would be a waste of time.
