SBC profit sags as margins narrow
Copyright 2004 TheStreet.com, Inc.
January 27, 2004 Tuesday 9:17 AM Eastern Time
SBC said fourth-quarter earnings fell from a year ago, as efforts to push into new growth businesses penalized profit margins.
For its fourth quarter ended Dec. 31, the San Antonio telco posted net income of $905 million, or 27 cents a share, down from the year-ago $2.4 billion, or 71 cents a share.
Excluding one-time items, latest-quarter earnings fell to 34 cents a share from 49 cents a year earlier. The earnings were in line with the Thomson First Call consensus estimate.
Revenue slipped to $10.1 billion from $11.2 billion a year ago. Those figures exclude results from the company's Cingular Wireless joint venture with BellSouth. Cingular, which is embroiled in a much-discussed merger bid for industry laggard AT&T Wireless, last week posted fourth-quarter revenue of $3.9 billion. SBC owns 60 percent of the venture.
SBC said fourth-quarter earnings were hit by the company's expansion into the long-distance and digital subscriber line, or DSL, high-speed Internet access market. SBC runs a DSL joint venture with Yahoo!. SBC has been trying to emphasize those businesses as it looks for ways to offset the ongoing erosion of its core local phone business. The company continues to lose local access lines, though it said that loss slowed in the latest period.
Taking a brighter view of the future, SBC predicted that annual sales — including Cingular — will stabilize this year. Sales have been slipping steadily at all of the Baby Bells in recent years, and investors have been looking for evidence that that trend will stop. SBC shares closed Monday at $26.69.