MCI struggles through first quarter

MCI, fresh out of bankruptcy, lost no time in reporting disappointing financial results Monday for its first quarter, ended March 31, 2004. It saw its revenue decline and its bottom line change from black to red compared with the first quarter of 2003.

MCI blamed excess capacity and ensuing pricing pressures for its subpar quarter. It plans to improve its financial position through layoffs and the rollout of new IP-based services, the company said in a statement Monday.

MCI reported first-quarter revenue of US$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 in 2004, 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, which under its recently changed WorldCom name starred in one of the worst corporate accounting scandals in recent times, 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 this form, saying it didn't believe the information was relevant.

The consensus expectation from analysts polled by Thomson First Call had been for a net loss of $0.89 per share. A Thomson First Call official couldn't determine from reviewing MCI's statement if this figure was comparable to the $1.19 per share net loss reported in the 10-Q.

MCI did exceed slightly 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 jumpstart revenue, it plans to focus on delivering new IP-based products to its enterprise customers, the company said in its statement.

WorldCom filed for bankruptcy in July 2002 in the midst of a massive multibillion dollar accounting scandal. It sought shelter under Chapter 11 of the U.S. Bankruptcy Code, from which it emerged last month. In March of this year, MCI reported it lost $48.9 billion in 2000, $15.6 billion in 2001, and $9.2 billion in 2002.

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