MCI who is in the middle of a bid war between Qwest and Verizon, reported a fourth-quarter net loss due to higher taxes.
Revenues in the fourth quarter were $5.0 billion, a decline of 2 percent sequentially and 10 percent year-over-year. Enterprise Markets revenue increased 1 percent sequentially, Commercial Markets revenue was flat sequentially and Mass Markets revenue was down 9 percent sequentially.
Operating expenses totaled $4.5 billion in the quarter, down 8 percent sequentially (excluding pre-tax impairment charges of $3.5 billion) and down 23 percent year-over-year. Access costs decreased 1 percent sequentially and declined 13 percent year-over-year. Selling, general and administrative costs fell 16 percent sequentially and 36 percent year-over-year. Included in operating expenses for the fourth quarter were $24 million of severance and reorganization costs.
Operating income for the fourth quarter of 2004 was $434 million, compared to an operating loss of $3.4 billion, (or operating income of $121 million excluding pre-tax impairment charges of $3.5 billion) in the third quarter of 2004 and an operating loss of $332 million in the fourth quarter of 2003.
Operating income before depreciation and amortization and gains on property dispositions would have been $774 million in the fourth quarter of 2004. In the fourth quarter of 2003, MCI’s operating income before depreciation and amortization and a loss on property dispositions would have been $293 million. Excluding the pre-tax impact of $3.5 billion of impairment charges, the comparable result in the third quarter of 2004 would have been $621 million.
Fourth quarter operating results were favorably impacted by approximately $270 million relating to certain unusual transactions including favorable settlements of bankruptcy-related matters, and changes in accounting estimates. Without the impact of these items, our operating income for the fourth quarter would have been $164 million.
Fourth quarter results also included $415 million of income tax expense. The expense relates to changes in estimates regarding our tax contingencies and the tax impacts of changes in foreign and state tax provisions.
Net loss for the fourth quarter of 2004 was $32 million, or $.10 cents per basic and diluted share. MCI reported net income of $22.2 billion in the fourth quarter of 2003, reflecting the financial impact of reorganization activities, and reported a net loss of $3.4 billion in the third quarter of 2004.
“Improvements in our financial performance in the face of difficult industry conditions illustrates that our IP-leadership strategy is gaining momentum,” said Michael D. Capellas, MCI president and CEO. “As we deliver new IP products and services to market, we expect
this trend to accelerate.”
Murdok | Breaking eBusiness News
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