MCI is cutting thousands of jobs

MCI said its losses were $71m (�39m), compared with earnings of $8m in the same period a year ago.

The company, formerly known as Worldcom , emerged from Chapter 11 bankruptcy protection earlier this year.

WorldCom gained notoriety in 2002 when it admitted to inflating profit reports by illegally booking expenses.

The scandal was a contributing factor to a slide in world equity markets, knocking billions off stock values.

Quarterly dividend

MCI, the US's second biggest long-distance phone company, has struggled to keep costs down in its price war with AT&T and US local telephone companies.

It had previously announced plans to cut 15,200 jobs this year, or about 28% of its work force.

The company said it had $5.4bn cash at the end of the second quarter after paying out $1bn in bankruptcy claims.

It revealed it was launching a quarterly dividend of 40 cents per share, part of a plan to return $2.2bn to shareholders.

Internet services

In July it was reported US investment group Leucadia National was planning to buy a controlling stake in MCI.

It was the first takeover interest in MCI since it shocked the US business community by disclosing an $11bn hole in its accounts, forcing it into bankruptcy protection.

It was the largest bankruptcy the world had ever seen.

The company, which provides voice, internet and data communications to 20 million customers in 65 countries, finally emerged from bankruptcy in April 2004 having changed its name from WorldCom to MCI.

The Virginia-based company lost $388m in its first quarter.