Asset Writedown Hurts MCI
Today it was MCI's turn, as it announced $3.5 billion in non-cash charges (see MCI Reports $3.4B Loss in Q3, AT&T to Take $11B Charge, and Sprint Posts Q3 $2.7B Loss).
Between them, the three carriers have cut back the value of their long-distance networks by $18.4 billion (AT&T's writedown was $11.4 billion and Sprint's $3.5 billion).
The charges, stated MCI in a press release, "reflect the overall industry environment, including recent regulatory decisions that impact the prospects for MCI's consumer business."
That's right -- it's not MCI's fault (see RBOCs Clear (Another) Regulatory Hurdle and BellSouth Applauds FCC Decision).
The writedown left MCI with a net loss of $3.4 billion, or $10.65 per share, compared with a $55 million net loss a year earlier. Without the charges, MCI says it would have reported an operating income of $121 million, up from $77 million a year earlier, and up from the second quarter's $41 million.
More worryingly, third-quarter revenues, at $5.1 billion, were down by 15 percent from the $6 billion recorded a year earlier, and down 3 percent sequentially from the second quarter's $5.2 billion. However, the revenue numbers met analysts' expectations, according to Reuters.
MCI's share price was up slightly by 5 cents to $17.30 in pre-market trading.
The consumer business that MCI is so worried about is in major decline. Its Mass Market division recorded revenues of $1.3 billion, down a whopping 18 percent compared with a year earlier.
The operator is tackling its declining revenues by cutting costs. Its selling, general, and administrative (SG&A) outlay in the third quarter was $1.2 billion, down 5 percent sequentially and down 24 percent from a year earlier.
MCI had $5.6 billion in cash on September 30 and total debt of $5.9 billion.
— Ray Le Maistre, International News Editor, Light Reading