MCI upbeat despite $3.4bn loss
Which is nice
Only six months out of bankruptcy, MCI has reported net losses of $3.4bn for Q3, due to falling revenues and a write down of the value of its network.
The company had revenues of $5.08bn to the end of September, down from $5.97bn for the same quarter of 2003. But the main cause of the loss was the charge of $2.77bn that the company took to write down the value of its telephone network.
Other telecoms such as AT&T have also written down the value of their networks, saying that regulatory changes and competition from wireless and cable-phone providers have made the networks less valuable. MCI's network spans 98,000 miles over six continents.
The write down led to the company having a net loss of $3.4bn, with per share losses of $10.65, compared to losses of only $55m for the same quarter of the previous year.
The company and the markets were upbeat about the results. In New York, MCI's shares rose steadily following the results and closed on Thursday up almost three per cent to $17.76.
"Our continued emphasis on operational execution produced solid improvements in the third quarter," said Michael Capellas, MCI's CEO. "Going forward, our focus will be on delivering next-generation IP-based products and services and further improving our cost structure."
The private IP network business does seem promising for the company. One of the contracts it won during the quarter involved managing a private IP network solution for Diageo, linking 281 locations in 53 countries. This will move Diageo from a frame relay environment to an IP network, using MPLS to provide network traffic management.
MCI, formerly known as Worldcom, emerged from Chapter 11 in April 2004, after 21 months of restructuring.
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