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Charges Trim MCI’s Income 11.5% for Fourth Quarter

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From Reuters

Long-distance telephone operator MCI Communications Corp. reported disappointing fourth-quarter earnings Tuesday, sending its once high-flying stock sharply lower on Wall Street.

MCI’s stock closed off $3.125 at $31.25 in over-the-counter trading.

The communications company said fourth-quarter profit fell 11.5% to $108 million from $122 million a year earlier. But excluding special charges, operating earnings rose sharply, MCI said.

Charges for engineering consolidation expenses and early debt retirement trimmed fourth-quarter earnings by $70 million.

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Revenue rose 19.6% to $1.71 billion from $1.43 billion, reflecting strong growth in the telephone business.

For the year, profit climbed to $558 million from $346 million, as revenue jumped to $6.47 billion from 1988’s $5.14 billion.

Some analysts saw the sharp selloff in MCI as symptomatic of a difficult stock market, rather than a reflection of changed fortunes at the company, whose stock rose from $9.50 in 1988 to a 1989 high of $45.

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MCI said fourth-quarter traffic volume grew rapidly and revenue grew 20%, with overall market penetration growing about 2 percentage points in 1989 despite increased competition and downward pricing pressure.

The company does not disclose its market share but analysts place it at 12%.

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