Long-distance firms to post strong profits: 2nd-quarter gains expected in range of 20% to 25%; steep costs hurt AT&T

Article Abstract:

Long-distance telephone companies MCI Communications Corp and US Sprint Communications Co are expected post earnings gains of 20 percent to 25 percent for the 2nd qtr 1990, while AT and T is expected to report lower earnings as a result of incurring start-up costs for its new entry into the credit card market. MCI expects to post profit of 67 cents a share, up 20 percent from 56 cents a share for the same period in 1989. Revenue growth is expected to reach a 20 percent growth to about $1.9 billion as compared with $1.59 billion in same period in 1989. US Sprint parent United Telecommunications Inc expects to post a 20 percent revenue growth and earnings of 53 cents a share as compared with 43 cents a share in the same period in 1989. AT and T is estimated to earn 58 cents a share for the period, which is down from the 72 cents a share analysts had predicted earlier.

T, Sprint Corp., American Telephone and Telegraph Co., Second Quarter

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MCI decides to offer payout semiannually

Article Abstract:

MCI Communications Corp will pay an initial semiannual dividend of five cents per share. MCI wants to attract new investors and reward those who have held on to the stock despite no payoffs. The annual payout of 10 cents a share is based on a yield of 25 percent. In comparison, AT and T pays $1.32 per share per year, or 3.3 percent. MCI's history of not paying out is based in part on the belief of founder William McGowan that dividends are taxed twice, once as corporate profit and again as personal income. Since the company started to have a positive cash flow in 3rd qtr 1988, company officials have been discussing the possibility of paying dividends to stockholders. MCI's free cash flow of $225 million will support payouts at present levels, but acquisitions of other long distance companies may prevent the appreciation of dividends before 1992.

Telecommunications, Stock

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