MCI Inc.'s revenue continued to decline in the third quarter as the company prepared to close its merger with Verizon Communications Inc.
The Ashburn company has been trying to manage costs in its sharply eroding consumer business while boosting sales of services such as network security for its business clients. In the past three years, MCI, the former WorldCom Inc., endured disclosure of accounting fraud and a decline in prices for the telecommunications services it sells.
MCI now employs 40,000 people, down from about 41,000 a year ago.
Revenue declined to $4.47 billion in the third quarter, from $5.08 billion in the third quarter of 2004. Third-quarter profit was $271 million (82 cents a share), compared with a loss of $3.4 billion ($10.65 a share). That loss was primarily because of $3.5 billion in impairment charges to adjust for a decline in asset value. In the second quarter this year, MCI earned $64 million (19 cents a share) on $4.68 billion in revenue.
"We have continued to focus on services that expand our relationships with existing customers and introducing innovative new products that can become the catalyst for new business development," said Michael D. Capellas, MCI's president and chief executive, according to a transcript of a teleconference with analysts.
He said the $8.5 billion merger with Verizon, which received final regulatory approval this week, will close later this year or early next year.
In the 1980s, MCI built its brand selling long-distance phone service to consumers, but it essentially left that business after regulatory and technological changes made the local and long-distance market unprofitable for the company. Instead, MCI has focused on selling high-end services such as secure private networks that companies use to communicate around the world. MCI's biggest assets are its big business customers, including the federal government, which is its single largest client.
Verizon has a set of complementary assets, including a wireless unit and a local phone customer base.
"We have become more confident that this is the best combination to enhance long-term value and create the best possible service offerings," Capellas said.