SBC gets boost from DSL and wireless
Published: 25 Jul 2001 15:46 BST
SBC Communications reported solid second-quarter results on Wednesday thanks to strong growth in its wireless and DSL businesses. Management also said earnings might top estimates for the year. Shares of the telecommunications company were up $1.20 to $42.
Earnings were $2.1bn, or 61 cents a share, topping First Call's prediction for earnings of 57 cents a share, and last year's second-quarter earnings of 56 cents a share.
Revenue grew 3 percent to $13.6bn over last year, including results from Cingular Wireless, a wireless joint venture with BellSouth, of which SBC owns 60 percent. Cingular started operations in October 2000.
SBC added in a statement that the modest amount of revenue growth in the second quarter is an effect of the weak US economy and increased competition. The company also said it benefited from the sale of non-strategic assets, including a security-monitoring business.
The company's strong suit was its digital subscriber line business. SBC saw 28 percent growth in its data revenue to $2.2bn and reported more than one million customers in service at the end of the quarter. That puts the company well ahead of its competition.
For the June quarter, EarthLink reported 346,000 broadband subscribers, the majority of which are DSL subscribers, and Qwest Communications International reported 360,000 DSL customers. Verizon Communications, also a major DSL player, reports earnings on 31 July. Though DSL has been a fast-growing area, subscriber growth has slowed during the downturn.
SBC said other highlights for the quarter included revenue growth of 13.6 percent to $3.6bn at Cingular. Cingular also added 701,000 new customers, bringing its total to 21.2 million. In SBC's long-distance business, there was a 27 percent increase in lines since the beginning of the year.
The company also said its earnings would be slightly above expectations for the year. Management expects full-year earnings before one-time items to be from $2.35 a share to $2.40 a share. First Call's consensus estimate is for $2.33 a share. SBC also said it expects third- and fourth-quarter revenue growth to be "modest".
Net income for the second quarter counted one-time items, including a gain of $189m related to a voluntary retirement program and a loss of $261m related to investments.
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