MCI struggles through Q1, plans 7,500 layoffs
It blamed excess capacity and pricing pressures for the subpar quarter
IDG News Service - MCI Inc., fresh out of bankruptcy, reported disappointing financial results yesterday for its first quarter, which ended March 31. It saw revenue decline and its bottom line change from black to red compared with the first quarter of 2003.
The telecommunications company blamed excess capacity and pricing pressures for its subpar quarter, and said it plans to improve its financial position through layoffs and the rollout of new IP-based services.
MCI reported first-quarter revenue of $6.3 billion, down from $7.2 billion in the first quarter of 2003. Without its Embratel Brazilian unit, which the company plans to sell this year, revenue fell to $5.4 billion from $6.6 billion.
The net loss was $388 million, compared with net income of $52 million in the first quarter of 2003.
MCI didn't provide earnings-per-share figures for either the 2004 or 2003 first quarters in its statement, nor in the accompanying financial tables. In a 10-Q form filed with the U.S. Securities and Exchange Commission Monday, MCI reported a net loss for the first quarter of 2004 of $1.19 per share. It didn't provide an earnings-per-share figure for the first quarter of 2003 in the form, saying it didn't believe the information was relevant.
The consensus expectation from analysts polled by Thomson Financial/First Call had been for a net loss of 89 cents per share. A Thomson/First Call official couldn't determine from reviewing MCI's statement if this figure was comparable to the net loss of $1.19 per share reported in the 10-Q.
MCI did slightly exceed the revenue expectation, which, excluding the Embratel results, was for $5.38 billion, the Thomson/First Call official said.
To reduce costs, MCI plans to lay off 7,500 employees in the second quarter. It also plans to further consolidate its network operations. To jump-start revenue, the company said it will focus on delivering new IP-based products to its enterprise customers.
Under its former WorldCom name, the company filed for bankruptcy in July 2002, in the midst of a massive multibillion-dollar accounting scandal. It sought shelter under Chapter 11, from which it emerged last month. In March, MCI reported it lost $48.9 billion in 2000, $15.6 billion in 2001, and $9.2 billion in 2002 (see story).
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