MCI, which is in the midst of a takeover bid by Verizon, Friday reported revenue of $5 billion in the fourth quarter, down 10% compared to the year-earlier period.
MCI, which is in the midst of a takeover bid by Verizon , Friday reported revenue of $5 billion in the fourth quarter, down 10% compared to the year-earlier period.
The company’s operating profit for the quarter, which ended Dec. 31, was $434 million, compared to an operating loss of $332 million a year earlier, it said.
The swing to an operating profit was due to a reduction in operating expenditure, down 23% year-on-year to around $4.5 billion for the quarter, the company said. Network access costs declined 13% year-on-year, and selling, general and administrative costs fell 36%, it said.
Unusual transactions, including the settlement of bankruptcy-related matters and changes in accounting estimates, also had a favorable impact of around $270 million on the quarter’s operating results, MCI said.
MCI also put improvements in operating performance during the quarter down to its focus on new IP services.
The company made a net loss in the fourth quarter of $32 million, or a loss of 10 cents per share; a year earlier, it had reported net income of $22.2 billion, including the financial impact of reorganization activities.
MCI is currently the target of takeover efforts by both Verizon and Qwest. Verizon said early last week that it had hammered out an agreement to buy MCI in a deal valued at $6.7 billion, but Qwest is expected to renew its own offer for the compan y very shortly.
The company breaks out results for three business units: enterprise markets, U.S. sales and service, and international and wholesale markets.
Revenue from enterprise markets, including government and major business accounts, dropped slightly, to $1.21 billion for the quarter, down 3% from $1.24 billion a year earlier, but operating income for the sector rose to $200 million from an operating loss of $23 million.
In the U.S. sales and service sector, including consumers and businesses not covered by the enterprise category, revenue dropped to $2.12 billion, down 15% from $2.49 billion a year earlier. Consumers and home businesses contributed around $1.2 billion of that, but marked the sharpest decline, 21% over the year. Operating income in the sector rose to $194 million from an operating loss of $42 million a year earlier.
The wholesale and international business brought revenue of $1.65 billion, down 9% from $1.81 billion a year earlier. Operating income for the sector rose to $40 million for the quarter, up from an operating loss of $267 million a year earlier. Revenue from international markets rose, while that from wholesale fell. The company attributed this to overcapacity and continued industry bankruptcies.
For the full year 2004, MCI reported revenue of $20.7 billion, down 15% from the $24.3 billion reported for 2003.
In the year ahead it expects revenue to continue to decline, to between $18 billion and $19 billion, driven down by falling consumer revenue. It blamed regulatory changes for its inability to make a profit in this market.
MCI made an operating loss for the full year of $3.2 billion. Excluding depreciation and amortization of $1.9 billion and impairment charges of $3.5 billion, the company would have made an operating profit of $2.2 billion for the year. For the full year 2003, the company made an operating profit of $0.7 billion. Excluding depreciation and amortization of $2.3 billion, it would have made an operating profit of $3.0 billion in 2003.
In 2005, the company expects to make a full-year operating profit of between $1.8 billion and $2.0 billion, excluding the effect of depreciation and amortization charges of between $1.4 billion and $1.5 billion. The company expects more of the revenue, and profits, to arrive in the second half of the year.
