MCI lowers revenue expectations

MCI cut its revenue projections over the next three years by US$4.2 billion.

The carrier, legally known as WorldCom, revised documents filed with the U.S. Bankruptcy Court Monday, which reflect the change to MCI’s projected revenues.

In April, MCI projected revenues totaling $24.7 billion for 2003, $25.8 billion for 2004 and $27.8 billion for 2005.

The carrier’s revised filing projects revenues of $24.5 billion for 2003, $24.6 billion for 2004 and $25 billion for 2005. That’s a reduction of $200 million, $1.2 billion and $2.8 billion, respectively.

MCI says it is lowering revenue estimates due to "intense pricing competition fueled by new entries of unlimited bundles, aggressive new DSL offerings and rapid adoption of national Do Not Call legislation," with small business and consumer customers.

Although three months ago when MCI revealed its three-year reorganization plan, which included revenue projections, industry watchers were skeptical of the carrier’s ability to build such growth.

"(MCI) has a deep hole to crawl out of. (CEO Michael) Capellas has cleaned house and is doing the best he can. The company is positive and upbeat," said Mark Winther analyst at consulting firm IDC in April when the carrier announced its reorganization plan. "But I'm skeptical about the company's ability to increase revenues and capture new business."

Perhaps MCI’s revised revenue projects are now more realistic.

Yesterday the carrier also announced it has reached a settlement with the Securities and Exchange Commission (SEC).

The service provider is setting records once again. According to court documents, MCI will pay penalties of $750 million in cash and stock. This payment is 75 times larger than any previous penalty imposed by the SEC.

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