MCI has emerged from the biggest bankruptcy in U.S. history and shed billions of dollars in debt, but many pressures the No. 2 long-distance phone company faced two years ago remain. However, the company believes its focus on security services will help it succeed moving forward.
“You’re going to see us make a major move into security as part of the expansion,” said President and CEO Michael Capellas. “Security is the No. 1 concern of virtually every CIO.”
MCI reported a profit in fiscal year 2003, which included a $22.1 billion gain as part of its restructuring, but MCI expects to post a loss for fiscal year 2004. In 2003, the company reported revenue of $27.3 billion, compared to $32.2 billion in 2002. MCI expects to generate 2004 revenue of $21 billion to $22 billion.
The former WorldCom expects revenue in its Mass Markets unit to decline 20 percent to 25 percent in 2004, “reflecting the negative impact of do-not-call legislation, increasing wireless substitution and ongoing pricing pressure.” The company says it expects to introduce a voice over IP initiative this year.
MCI emerged from bankruptcy with approximately $3 billion in cash and $5.5 billion in debt –less than what its peers owe. AT&T Corp., for example, ended the first quarter with net debt of $8.4 billion, and Sprint Corp. lists net debt of $16.4 billion.
MCI, which does business with approximately 65 percent of the Fortune 1000 companies, will seek to get a larger proportion of dollars from U.S.-based global companies and other businesses abroad, according to the company’s top executive.
“Certainly through the bankruptcy process in many cases where we were hit the most was internationally, where there is a different notion of bankruptcy than in the U.S.,” Capellas said during a conference call with reporters April 20, the day the company officially reorganized.
The company’s reorganization aims to leave behind one of corporate America’s most notorious scandals. Since disclosing an accounting fraud that tallies an estimated $11 billion, the company has replaced its board of directors and management team and implemented several policies aimed to restore trust in the telecommunications giant.
