Analysis of MediaOne Group MediaOne Group was created by a transfer of operating divisions of U.S. West to the newly created company in 1996. The following information was presented in the Condensed Consolidated Statements of Operations for MediaOne Group for 1998 and 1997

(stated in millions, except per share amounts):

. By what amount did MediaOne’s reported income (loss)
from continuing operations increase or decrease in 1998 over 1997? Does the change in 1998 indicate that underlying operations of MediaOne have improved substantially?
Explain your answer.
. Net income for 1998 was significantly greater than in 1997. What were the major causes of the increase?
. Does it appear that MediaOne had stock rights or convertible securities outstanding at December 31, 1997? December 31, 1998? How do you know?
. What income statement items would the management of MediaOne be most likely to highlight to financial statement readers to encourage them to invest in MediaOne?
. What income statement items would an investment analyst be most likely to point out in attempting to discourage an investor from purchasing shares of MediaOne?

Transcribed Image Text:

1998 1997 Revenue: Domestic Cable and Broadband MediaOne International Cable and Broadband Corporate and Other Current Operations Domestic wireless $ 2,467 $2,323 24 18 30 78 2,521 2,419 361 1,428 Total Operating expenses Income (loss) from operations Interest expense $ 2,882 $3,847 3,121 3,817 (239) 30 491 678 Equity losses in unconsolidated ventures 417 909 Gain on sale of domestic wireless investment 3,869 Other income (expense)-net (84) 350 Income (loss) from continuing operations before income taxes 2,638 (1.207) Income tax benefit (provision) (1.208) 380