MCI WorldCom Shows Quarterly Profit in First Report Since Merger
MCI WorldCom Inc. on Thursday reported a third-quarter profit in its first earnings report since MCI Communications Corp. and WorldCom Inc. joined forces to create the nation’s second-largest long-distance company.
The company said it had profit before charges of $430 million, or 19 cents a share, contrasted with a year-ago loss of $265 million, or 17 cents, for the two former companies combined, as its investment in Embratel, Brazil’s dominant phone company, boosted revenue. The latest results exclude charges of $3.22 billion for the MCI acquisition.
The Embratel investment added $930 million to MCI WorldCom’s revenue, which grew 30% to $8.61 billion. Data services revenue rose 33% and Internet services rose 72%. Revenue from voice services rose 10%, accounting for 64% of overall sales.
The 30% revenue gain compares with WorldCom’s average growth of 57% over the last five years.
“This company cannot achieve the kind of percentage growth numbers the WorldCom of a couple of years ago was able to achieve,” said Michael Mahoney, senior portfolio manager at the $2-billion Aim Global Telecommunications Fund, which has 1 million shares.
He said he still expects MCI WorldCom to grow at a faster clip than rivals, including AT&T; Corp., the No. 1 U.S. long-distance phone company.
At a Glance
Other earnings, excluding one-time gains and charges unless noted:
* MGM Grand Inc.’s third-quarter profit fell 54% to $17.1 million, or 31 cents a share, missing forecasts by 2 cents, as the casino company controlled by billionaire Kirk Kerkorian won less than usual at the gambling tables of the MGM Grand in Las Vegas. Revenue fell 7.1% to $193.7 million.
* Sun Healthcare Group Inc. said its third-quarter net income more than tripled to $11.5 million, or 20 cents a share, a penny below estimates, from $3.73 million, or 7 cents, a year ago. The nursing home operator’s revenue rose 49% to $826.7 million. Sun Healthcare also said it cut 500 jobs during the quarter and plans to trim more after a drop in demand for its contract-therapy services and changes in the health-care industry.
* USA Networks Inc., a media and electronic-commerce company, said its third-quarter loss narrowed more than expected to a pro forma $6.1 million, or 4 cents a share, compared with a loss of $7.4 million, or 5 cents, a year ago. The company, headed by industry veteran Barry Diller, was expected to lose 8 cents. Revenue rose 7.6% to $638.7 million pro forma. Higher advertising revenue at its cable TV networks and stronger sales and lower merchandise returns at its electronic-retailing business offset declining cash flow at its Ticketmaster concert ticketing business.
