MCI Communications Corp. said Wednesday that it will cut its 40,000-strong work force by as much as 3,000 over the rest of the year in a restructuring that will unify its consumer and business markets divisions.
The second-largest U.S. long-distance carrier said it will take a pretax charge of $600 million to $800 million in the third quarter to cover the layoffs and consolidations and to write off some assets associated with its core business.
MCI also reported a profit of $260 million in the second quarter, up from $215 million in the year-ago period. Revenue rose 12%, to $3.7 billion from $3.3 billion, with strong gains across all market segments.
Washington-based MCI said it will consolidate its core business and consumer telecommunications operations, network operations and information systems under its MCI Telecommunications Corp. unit.
Ventures, alliances and new businesses will be consolidated as a separate unit, it said.
“They are pointing themselves to be the meanest, leanest fighting machine in the market,” said Jeffrey Kagan, who runs an industry consulting firm. “I see other long-distance companies and regional Bells following suit in the next year or two.”
Job losses at MCI, estimated at 2,500 to 3,000, will be spread across its major centers of employment: its Washington headquarters; Raleigh, N.C.; Colorado Springs, Colo., and Cedar Rapids, Iowa. It also has a dozen customer service centers around the country and a large technical center in Dallas.
MCI’s stock rose 62.5 cents to $24 on the Nasdaq.