Quarterly Profit Surges 72% at MCI WorldCom
MCI WorldCom Inc., the long-distance company that’s buying rival Sprint Corp., said Thursday its profit surged 72% in the first quarter as data services and international sales offset slower growth in phone revenue.
MCI said net income rose to $1.29 billion, or 43 cents a share, from $749 million, or 25 cents, in the year-ago quarter, on an 8.5% increase in revenue to $9.15 billion.
The results, which matched analysts’ forecasts, sent MCI WorldCom shares up $4.50, or 11%, to close at $45.38, their biggest gain in almost six years, in active Nasdaq trading. The shares have fallen 22% in the last year after a more than 35-fold increase from 1990 to 1998.
MCI’s results “should at least reassure [Wall Street] that they don’t have to take their numbers down more,” said J. Michael Gallipo, manager of the Monument Telecommunications Fund, which owns about 19,000 MCI WorldCom shares.
Meanwhile, GTE Corp., the local telephone company being acquired by Bell Atlantic Corp., said higher sales of wireless and Internet services helped push its profit up 10% to $723 million, or 74 cents, matching forecasts. Total sales rose 9.8% to $6.1 billion.
Sales at GTE’s U.S. wireless operations jumped 30%, while revenue from data services sold by its Internet-service unit Genuity climbed 53%. GTE plans to sell 90% of Genuity to the public to win regulatory approval for Bell Atlantic’s buyout.
GTE ended the quarter with 7.4 million wireless-voice customers and 200,000 wireless-data customers.
GTE’s shares fell $2.31 to close at $69.75 on the NYSE.
At MCI, revenue from Internet, international and data services jumped 34% to $3.78 billion. Telephone revenue rose 3% to $5.36 billion after MCI WorldCom cut prices for some long-distance calls to 5 cents a minute.
In a conference call with analysts and reporters, MCI Vice Chairman John Sidgmore said revenue from Internet operations will increase in the coming months with the renewal of a contract to carry network traffic for America Online. Sidgmore also said the deal could lead to more opportunities after AOL merges with Time Warner.
The company expects its 2000 revenues to increase 13.5% to 15.5% and said it remains comfortable with Wall Street 2000 earnings forecast of $1.89 a share.
MCI’s results exclude operations from Brazil’s Embratel Participacoes, in which MCI WorldCom owns a controlling stake.
At a Glance
Other earnings, excluding one-time gains or charges unless noted, include:
* American International Group Inc. posted a 16% increase in operating earnings to $1.36 billion, or 86 cents a share, matching forecasts, with help from higher prices for its insurance policies. Revenue jumped 14.9% to $10.89 billion.
* AutoNation Inc. reported an 11% increase in first-quarter profit to $64.7 million, or 18 cents a share, exceeding estimates of 13 cents, as U.S. economic growth powered sales of new cars and trucks as the company cut costs. Sales rose 15% to $5.23 billion. Sales in stores open at least a year rose 7.2%.
* Dow Chemical Co. said first-quarter earnings rose 26% to $416 million, or $1.83 a share, well beyond expectations of $1.65, on higher prices and increased demand in markets outside North America. Revenue was up 22% to $5.38 billion.
* R.R. Donnelley & Sons Co., the No. 2 U.S. commercial printer, said its first-quarter profit edged up 2% to $46.7 million, or 38 cents a share, a penny better than estimates. Sales rose 19% to $1.34 billion at the commercial printer, which recently signed contracts to print Martha Stewart Living magazine and the music magazines Vibe, Spin and Blaze.
* Kellogg Co.’s profit rose 12% to $161.7 million, or 40 cents a share, as the cereal maker cut costs and boosted sales of snack foods. Revenue was flat at $1.75 billion.
* Starbucks Corp. said profit rose 30% in its fiscal second quarter to $23.4 million, or 12 cents a share, matching forecasts. Revenue jumped 34% to $504.7 million, as sales grew in its coffee shops and in supermarkets. Sales at stores open at least a year rose 10%.
* EchoStar Communications Corp. said its first-quarter loss widened to $185.1 million, or 40 cents a share, from a loss of $103.3 million, or 30 cents, as the satellite TV provider offered incentives to win new customers. Sales jumped 83% to $565.7 million. EchoStar’s subscriber base grew by 455,000, or 40%. Analysts had expected a loss of 35 cents.
