updated 2/25/2005 2:32:07 PM ET 2005-02-25T19:32:07

MCI Inc., the telecommunications company that is the target of two competing acquisition bids, swung to a loss of $32 million in the fourth quarter of 2004, but reported an operating profit. Its revenue fell and it forecast more declines in 2005.

The company reported Friday its loss amounted to 10 cents per share for the last three months of 2004, compares to a profit of $22.2 billion in the fourth quarter of 2003 connected to its bankruptcy reorganization.

The results reflected a $415 million income-tax charge.

Operating income for the quarter was $434 million, compared to a loss of $332 million in the year-ago quarter. The operating income includes $270 million in favorable settlements of bankruptcy related matters. Excluding those items, the company would have $164 million in operating income, or about 51 cents per share.

Quarterly revenue decreased 10 percent to $4.97 billion from $5.5 billion a year ago.

A big chunk of the lost revenue came in MCI’s mass markets segment, which includes its residential long-distance service. MCI has been reducing its efforts in that area, and mass markets reported a 21 percent drop in quarterly revenue, to $1.2 billion as the company lost long-distance customers and cut back on advertising.

The company’s enterprise segment, which focuses on large corporate customers, saw the smallest drop in revenue, a loss of only 3 percent to $1.2 billion. MCI has directed most of its efforts since emerging from bankruptcy to its Enterprise customers.

For the year, the company reported a loss of $3.89 billion, or $12.12 per share, compared to a $22.2 billion profit in 2003. The vast majority of the loss in 2004 stemmed from a one-time accounting write-down, while the 2003 profit is explained by accounting items associated with its bankruptcy reorganization.

Yearly revenue dropped 15 percent, from $24.3 billion in 2003 to $20.7 billion in 2004.

The company advised Friday that its revenue decline will continue in 2005, at a slightly slower rate. It estimated 2005 revenues of $18 billion to $19 billion, a decrease of 10 percent to 14 percent.

MCI made no mention of its planned $6.7 billion agreement to be acquired by Verizon Communications Inc. in its release Friday.

On Thursday, another regional phone giant Qwest Communications International Inc. modified its earlier spurned offer of $8 billion for MCI, setting the stage for another round in its competition with Verizon for the long-distance company.

MCI said Thursday it would consider Qwest’s bid.

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