WASHINGTON – Long-distance telephone company MCI Inc. (MCIP), the target of a takeover battle between Qwest Communications and Verizon, on Friday reported a fourth-quarter net loss due to higher tax costs.
MCI's net loss totaled $32 million, or 10 cents per share. Operating income was $434 million, compared with an operating loss of $332 million in the fourth quarter a year earlier.
MCI previously announced that fourth-quarter revenue fell 10 percent to $5 billion.
MCI received a revised $8 billion takeover offer from Qwest Communications International Inc. (Q) on Thursday, more than a week after accepting a $6.75 billion bid from Verizon Communications Inc. (VZ).
MCI's board said it would thoroughly review Qwest's new offer, as several of its largest shareholders have questioned the wisdom of accepting Verizon's lower offer.
Since its emergence from the largest bankruptcy in U.S. history last April, MCI has suffered from declining prices for its core services to large businesses. It has also been forced to reduce its consumer business due to regulatory changes.
The fourth-quarter net loss was due mostly to $415 million in income tax costs. MCI said the higher costs stemmed from changes in estimates for tax contingencies and impacts from foreign and state tax provisions. The company has been trying to settle claims from more than a dozen U.S. states demanding at least $1.5 billion in back taxes.
MCI's corporate business had operating earnings of $200 million in the quarter, while its small business and consumer unit had operating earnings of $194 million. Its international and wholesale unit earned $40 million.
The company said it expects 2005 operating income, before depreciation and amortization, of $1.8 billion to $2 billion, with gains in profitability in the second half of the year.
It expects revenue to decline 10 percent to 14 percent in 2005, to a range of $18 billion to $19 billion, primarily due to consumer market declines. It also estimates $1 billion in capital spending.