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Asset Sale Helps Put MCI in the Black

The company, formerly WorldCom, reports net income of $64 million, ending a string of losses since its bankruptcy. It is being sold to Verizon.

August 10, 2005|From Bloomberg News

MCI Inc., the long-distance phone company being bought by Verizon Communications Inc., posted its first profit since emerging from bankruptcy in April 2004.

Net income was $64 million, or 19 cents a share, contrasted with a net loss of $71 million, or 22 cents, a year earlier, MCI said Tuesday. Sales fell 10% to $4.68 billion.

MCI sold a stake in a Mexican unit and recorded a tax benefit and gains from investments that added a total of $122 million to earnings. Chief Executive Michael Capellas reduced expenses 11% to help Verizon wring benefits from the $8.46-billion deal, expected to close next year. Sales to large companies fell 2.6%, the smallest decline of Ashburn, Va.-based MCI's three divisions.

New York-based Verizon, the largest U.S. telephone carrier, is buying MCI to gain access to the company's 140-nation phone and data network as well as contracts with corporate customers including Hewlett-Packard Co. MCI reported $22 million in costs from the merger.

Shares of MCI, the No. 2 U.S. long-distance phone carrier, rose 7 cents to $25.38.

MCI, formerly WorldCom Inc., emerged from bankruptcy last year, almost two years after an $11-billion fraud forced the company to reorganize.

MCI's former CEO, Bernard J. Ebbers, was convicted of orchestrating the fraud and sentenced to 25 years in prison. He's appealing the conviction.

Buford Yates, a former chief accountant at WorldCom, was sentenced Tuesday to one year and one day in prison for his role in the fraud.

MCI shareholders have yet to vote on whether to approve the planned takeover by Verizon. The vote probably will take place in September.

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