The Real truth about MCI’s Dividend

MCI after posting a loss of $71 million in the second quarter, says it is going to declare 40 cents a share in quarterly dividend or about 11.6% in dividend yield!. Why? As part of its bankruptcy reorganization, the company is supposed to use all excess cash to maximize the share holder value, and I guess in this case it has decided to give money to all the shareholders. The company has about $2.2. billion in excess cash – not my words, and I am quoting CEO Michael Capellas. With continued weakness in its long distance business hurting the bottom line, the company like its long time rival, AT&T is planning to pull back on the local business as well. But that’s not the story. Call me a conspiracy theorist, but all those big shots who bought the company bonds and stocks for literally pennies on a dollar – they are getting a piece of the company for free. This act of generosity benefits two people at the very least.

• Capellas will make about $1.31 million a year in dividends, based on the 818,934 shares he held as of last month.
• Mexican billionaire Carlos Slim, the company’s largest shareholder, would reap about $68 million a year, based on the 42.6 million shares he held as of April.