MCI reported Q1 revenue of $6.3 billion, down from $7.2 billion a year earlier, including the consolidated results of Embratel. The decline reflects the adverse industry environment, as excess capacity and new technology adoption continue to pressure pricing. Exclusive of Embratel, the impending sale of which is expected to be completed in 2004, first quarter revenue declined to $5.4 billion from $6.6 billion a year earlier. There was an operating loss of $205 million for Q1, compared to operating profit of $634 million in the first quarter of 2003. Excluding Embratel, the 2004 loss was $265 million, and the year-earlier operating profit was $604 million.
"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 Michael Capellas, MCI president and chief executive officer. "In response we are accelerating our cost reduction program, ramping new product introductions and optimizing our network wherever possible."
MCI outlined several initiatives aimed at lowering its cost structure and helping it to return to profitability in the second half of 2004. These include:
- increasing international traffic following emergence from bankruptcy;
- focusing on delivery of new IP-based products to its enterprise customers;
- further reducing its workforce by 7,500 positions in the second quarter of 2004; and
- further consolidating and optimizing its network operations.
