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MCI Offers Quarterly Dividend Despite Loss

August 06, 2004|From Associated Press

MCI Inc. on Thursday reported a net loss of $71 million in the three months ended in June, its first quarter since the former WorldCom emerged from bankruptcy protection after the biggest accounting scandal in history. But the quarterly performance was better than expected, and the telecommunications company announced a sizable cash dividend for stockholders.

The company also revealed it might follow the lead of rival AT&T Corp. by sharply curtailing its consumer telephone business, a move prompted by regulatory developments that have made it more expensive for the companies to connect calls using the local Bell networks.

The loss reported Thursday, amounting to 22 cents a share, compares with a profit of $8 million in the second quarter of 2003.

Still, the latest results were a considerable improvement from a $388-million loss in the first three months of the year, and Wall Street had anticipated a much bigger loss.

MCI's stock surged 17% after the report, which was released after the close of regular stock trading. The shares had fallen 8 cents to $13.84 on Nasdaq before the report, but then shot to $16.23 by early evening.

In a conference call with investors, Chief Executive Michael Capellas said unfavorable regulatory rulings would make it difficult for companies like MCI to make a profit in the competitive consumer telephone market.

MCI did not explicitly explain its plans. But company executives agreed when an analyst asked whether their plans were similar to those announced last month by AT&T, which said it would no longer actively pursue new residential customers.

MCI reported revenue of $5.24 billion in the quarter ended June 30, a 15% drop from the $6.17-billion revenue in the second quarter of 2003.

The company said it would begin paying a quarterly dividend of 40 cents a share on Sept. 15 to shareholders of record on Sept. 1.

The board declared the dividend after determining there was $2.2 billion in cash that could properly be distributed to stockholders under a bankruptcy reorganization plan, which requires MCI to maintain adequate cash to cover operating expenses and pay bondholders.

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