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BellSouth shows mixed numbers

Wed, 04/21/2004 - 8:00pm
Staff

Copyright 2004 TheStreet.com

April 22, 2004 Thursday 9:31 AM Eastern Time

From Lexis Nexis

Taking a timeout from its refocusing efforts, BellSouth (BLS:NYSE) posted mixed quarterly numbers Thursday.

The Atlanta local phone giant posted a first-quarter profit from continuing operations of 48 cents a share on a so-called normalized basis. That's down from 50 cents a year ago and short of the 51-cent Wall Street analyst consensus estimate. Revenue was down slightly at $5 billion.

Latest-quarter net income, including accounting changes, was $1.6 billion, or 87 cents a share. That's up from the year-ago $1.23 billion, or 66 cents a share.

The company added 636,000 long distance customers and 156,000 DSL, or digital subscriber line high-speed Internet access, customers in the first quarter.

The news comes as BellSouth, the No. 3 local-phone player after rivals Verizon (VZ:NYSE) and SBC (SBC:NYSE), moves toward the sale of its Latin American wireless assets. BellSouth has said that the Latin American assets will be considered discontinued operations in 2004 financial reports.

On March 8, BellSouth agreed to sell its interests in 10 Latin American operations to Telefonica Moviles, the wireless affiliate of Telefonica SA. The transaction is expected to close in stages as closing conditions are met, with the final closing expected to occur in the second half of 2004, BellSouth said.

BellSouth and its Baby Bell peers have been scaling back their noncore operations in recent months to focus on the fast-growing U.S. wireless business. The shift suggests that the companies increasingly see domestic wireless, rather than their eroding local wireline operations, as their core competency.

That focus explains why SBC and BellSouth, co-owners of the No. 2 U.S. wireless service, Cingular, have agreed to fund the $41 billion buyout of No. 3 player AT&T Wireless (AWE:NYSE). On Tuesday, Cingular posted solid subscriber additions and reduced churn, or subscriber defection, figures. Meanwhile AT&T Wireless reeled from a stunning and practically unprecedented customer exodus.

On Wednesday, SBC posted solid first-quarter numbers, benefiting from its increasing presence in wireless and digital subscriber line, or DSL, Internet service.

BellSouth said just last month that changes in retiree pension and pills costs would add just a penny to its 2004 earnings, down from the 7-cent benefit forecast earlier. In January, the company said it expected the benefit from accounting changes related to subsidized medical benefits for its retirees. Now the company says the new accounting for those costs will be spread over a longer period.

On Wednesday, the stock added a penny to $26.09.

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