Posted on: Tuesday, May 11, 2004

MCI to cut 7,500 jobs, reports $388M loss

By Matthew Barakat
Associated Press

McLEAN, Va. — MCI will eliminate about 15 percent of its work force — 7,500 jobs — this year to get its costs in line with weak revenues that resulted in a first quarter loss of $388 million.

The company said yesterday the job cuts will occur in the second half of the year. MCI employs about 50,000 workers, not including layoffs of 4,500 workers in March that have not fully taken effect yet.

The combined elimination of 12,000 jobs will save the company $600 million a year once fully implemented, said Michael Capellas, MCI president and chief executive officer. He added that cutting jobs "is always our last option."

The company did not specify what jobs would be cut and what locations would be affected.

Company spokesman Peter Lucht said only that the cuts would be across the company and would be done with an eye toward maintaining customer service.

The company estimated that the layoffs and other cost-cutting would allow it to return to profitability in the second half of the year.

The company's earnings release yesterday was the first for the company since it emerged last month from nearly two years of bankruptcy protection and changed its name from WorldCom.

The $388 million, or $1.19 per share, loss compared with a net profit of $52 million in the year-ago quarter. The company said the weaker performance stemmed from the intense competition on prices within the industry, resulting in lower revenues.

"Although we made significant strides in restructuring the company during the past year, overall industry conditions and an unfavorable regulatory environment affected our first quarter results," said Capellas.

Quarterly revenue declined almost 13 percent to $6.30 billion.