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MCI depreciation charge drops earnings 66% in first quarter Decline reflects efforts to enter local markets; Communications


MCI Communications Corp., the nation's second largest long-distance company, said yesterday that its first-quarter earnings were down 66 percent from the same quarter last year, due in part to a $137 million computer-equipment depreciation charge.

The company reported $101 million in quarterly net income, or 14 cents per diluted share. Last year, MCI had $295 million in first-quarter net income, or 42 cents per diluted share.

In addition to the depreciation charge, MCI's earnings also reflected a $51 million gain from the company's investment in Brooks Fiber Properties Inc. This gain was realized when another big long-distance firm, WorldCom Inc., bought Brooks Fiber.

Last November, WorldCom announced that it is buying MCI for $37 billion. The purchase is expected to close this summer.

Excluding the depreciation charge and the investment gain, MCI had $155 million in net income, or 21 cents per diluted share, down 48 percent from last year's first quarter.

This showing was slightly better than expected; major earnings-forecasting services had predicted that MCI would post earnings of 18 or 19 cents per share.

Charles A. DiSanza, an analyst for Gerard Klauer Mattison & Co. Inc. in New York, said that MCI's earnings downturn reflected the company's continued bid to build up services outside of the long-distance market. "They're still spending money on getting into local," he said.

MCI said the volume of calls on its network was up 13.8 percent in the quarter.

Pub Date: 5/01/98

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