MCI Inc. said Monday it lost $388 million in the first quarter, and would cut 7,500 jobs in an effort to restore profits in the second half of 2004.
The job cuts, equal to roughly 15 percent of MCI’s current workforce, come on top of 5,700 job cuts announced earlier this year by the second-largest U.S. long-distance telephone company.
MCI, which emerged from the largest bankruptcy in U.S. corporate history last month and shed the WorldCom name, previously forecast a net loss for all of 2004, as its sales and prices shrink under increasing competition.
For the first quarter, MCI said it lost $388 million, or $1.19 a share, compared with a profit of $52 million in the same quarter a year earlier, when it had no shares trading due to the bankruptcy.
Revenues fell 12.9 percent to $6.3 billion. Excluding its stake in Brazilian network operator Embratel, which it agreed to sell last month, MCI’s revenues fell 17.7 percent to $5.4 billion.
MCI and long-distance giant AT&T Corp. have lost millions of customers to traditional local phone companies, known as the Baby Bells, and to wireless phones that typically offer free long-distance calls. The Baby Bells have successfully garnered a sizable share of the residential long-distance business, and have now set their sights on high-margin business clients.
MCI said revenues from voice service to business customers fell 13 percent, while long-distance sales to residential customers fell 37 percent.
MCI has blamed part of the decline in its residential long-distance business on a federal crackdown on telemarketing, and it had announced 4,000 job cuts in March related mostly to the closing of three telemarketing call centers. In January, it had said it would cut 1,700 jobs in its operations and technology sector.
An MCI spokesman said it was not clear where the 7,500 new positions to be cut would come from. The company currently has about 50,000 employees.
MCI also revealed it had paid former president and chief operating officer Richard Roscitt $8 million after his role as president was taken by chief executive Michael Capellas in March. Capellas had been chairman and CEO, but surrendered the chairman title as part of MCI’s corporate governance reforms.
Shares of MCI fell after news of its earnings, closing down $1.10, or 7.7 percent, at $13.15 on Pink Sheets.