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MCI meets 4Q forecasts
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February 10, 2000: 11:57 a.m. ET
But upstart RCN Corp. posts much bigger than expected loss in period
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NEW YORK (CNNfn) - MCI WorldCom Inc. reported a near-tripling of fourth-quarter earnings Thursday, meeting analysts' estimates, but upstart telecom company RCN Corp. badly missed estimates for the period, sending its stock plunging.
MCI WorldCom earned $1.2 billion, or 41 cents a diluted share, excluding special items, gains and contribution from its investment in Brazilian telecom Embratel. The results were in line with forecasts of analysts surveyed by earnings tracker First Call Corp.
A year earlier, MCI WorldCom had net income of $460 million, or 15 cents a diluted share.
Net income in the latest quarter, including all special items and Embratel's contribution, was $1.3 billion, or 44 cents a share.
Revenue excluding Embratel results reached $8.9 billion from $7.7 billion a year earlier. The company said the best growth came in its Internet and non-U.S. operations, which each saw revenue climb more than 50 percent. The traditional telephone business had only a 4 percent revenue gain, but it still accounts for about 60 percent of total revenue.
"Our investments in data, Internet and international have been particularly timely and have positioned the company to post industry-leading incremental revenue gains," said Bernard Ebbers, president and chief executive of MCI WorldCom.
MCI WorldCom shares rose 2-1/8, or 5.2 percent, to 50-1/4 in trading Thursday morning, after strong gains in pre-market trading Thursday and after-hours trading Wednesday.
Reuters reported Thursday that MCI officials expect its revenue stream from America Online Inc. (AOL: Research, Estimates) to increase despite the online company's planned purchase of Time Warner Inc. (TWX: Research, Estimates), the media conglomerate whose holdings include cable operations as well as CNN.
MCI WorldCom (WCOM: Research, Estimates) is the nation's second-largest long-distance carrier and is in the process of buying number three Sprint Corp. (FON: Research, Estimates). That deal is expected to close in the second half of this year.
MCI officials denied Thursday that the company made concessions to European regulators regarding the deal. Regulators commented earlier in the day that they had received unspecified concessions from the two companies as a condition of approval.
For the year, MCI WorldCom posted earnings excluding special items and Embratel of $3.9 billion, or $1.31 a diluted share. That compares with 1998 pro forma earnings of $1.3 billion, or 43 cents a share. Net income including all special items and Embratel, came to $4.0 billion, or $1.35 a diluted share, in 1999, compared with a net loss of $2.7 billion, or 1.35 a share, in 1998.
Revenue excluding Embratel rose to $34.3 billion from $30.9 billion on a pro-forma basis in 1998.
Upstart RCN misses the mark
RCN Corp. posted a much larger than expected loss for the fourth quarter, as the company spent heavily to expand its fiber-optic network in California, Chicago and the Northeast.
The net loss for the period reached $136.7 million, or $1.78 a share. Analysts surveyed by First Call projected only a loss of $1.43 a share. The company lost $65.4 million, or $1.01 a share, a year earlier. RCN said pro formal revenue was $89.5 million, compared with $74 million in the year-earlier period.
RCN (RCNC: Research, Estimates), which got a $1.65 billion investment from Microsoft co-founder Paul Allen in October, aims to offer bundled phone, Internet and cable services to major metropolitan markets. It said the current investments and losses are necessary at this point of its development, adding that it is looking for opportunities in additional markets.
For the year the net loss was $368.6 million, or $5.12 a share, compared with a loss of $205.4 million, or $3.36 a share, in 1998. Revenue for the year rose 37 percent to $335.8 million.
Shares of RCN fell sharply early Thursday, although they recovered somewhat as the morning progressed. Shares traded at 65-13/16 just before 11 a.m., down 4-11/16, or 6.6 percent on the day. Earlier in the morning the stock fell as low as 59-5/8, down 15.4 percent.
From staff and wire reports 
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