SBC profit falls, but sales decline slows
Copyright 2003 MarketWatch.com Inc., All Rights Reserved
October 21, 2003 Tuesday 9:35 AM
Washington - SBC Communications recorded a drop in third-quarter profit and sales as it lost more local lines to rivals, but the phone giant also managed to slow the decline in its business, the company said Tuesday.
In the latest quarter, SBC earned $1.22 billion, or 37 cents a share, down from $1.71 billion, or 51 cents, a year ago. That fell below the 39 cent consensus of analysts surveyed by Thomson First Call.
Revenue dropped to $10.24 billion from $10.56 billion a year ago. Yet sales matched the prior quarter's level, a potentially good sign that SBC is slowing the recent erosion in its businesses.
Those numbers exclude Cingular, the company's wireless joint venture with BellSouth. The wireless unit added 745,000 subscribers for a total of 23.4 million. Sales rose 4.6 percent to $3.95 billion.
The company (SBC) issued Cingular results late Monday. In early Tuesday action, SBC stock, a component of the Dow industrials, slipped 70 cents to $21.70.
In the main phone business, meanwhile, costs rose $100 million to $8.6 billion from a year earlier. The company cited increased expenses for workers' health care and retirement benefits as well as higher marketing costs to acquire new customers.
In addition, SBC added a record 365,000 customers to its digital subscriber line service, which delivers high-speed Internet access over ordinary copper lines. It now has a total of 3.1 million, the most of any phone company.
The company also added 1.7 million long-distance lines for a total of 11.5 million. During the quarter, SBC got regulatory permission to sell long-distance service in the rest of its states.
From the second quarter to the third quarter, SBC also said it was able to reduce by one-third the loss of local lines to rivals.
Like other big local phone companies, SBC has been hampered by a combination of tepid demand, stiffer competition and a move by some customers to newer communication services such as wireless.
To slow the decline in revenue, SBC is offering discount "bundles" that allow customers to receive one bill for up to four services - local, long distance, wireless and high-speed Internet.
The company has also sharply cut costs, in part by trimming its payroll.