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Mixed phone signals in 3Q
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October 20, 1999: 3:43 p.m. ET
Bell Atlantic net rises 10%, BellSouth up 25%, but Sprint profit declines
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NEW YORK (CNNfn) - Bell Atlantic Corp. and fellow regional telephone operator BellSouth Corp. reported double-digit profit growth Wednesday while long-distance provider Sprint Corp. rang up weaker earnings.
The two regional Bells benefited from an ability to tap the three hot submarkets in the telecom sector: international, wireless and data services. Sprint, while strong in mobile service, has been slower to take off in those other two areas.
"All in all, the results were solid," said Blake Bath, a telecom sector analyst with Lehman Brothers in Washington. At the Bells, Bath added, "you have to look at data, wireless and international growth. It is enabling them to show double-digit growth."
New York-based Bell Atlantic, the nation's largest regional Bell operating company, reported income before one-time items of $1.2 billion, or 76 cents a diluted share, up from $1.1 billion, or 69 cents per share, a year earlier.
The third-quarter 1999 results matched analysts' earnings forecasts, as compiled by research firm First Call Corp.
Bell Atlantic credited surging demand for broadband, or high-speed, data service and 18 percent growth in mobile-phone service revenue to $1.1 billion for the earnings improvement.
The latest results exclude costs related to Bell Atlantic's 1997 buyout of Nynex, which reduced earnings by 2 cents per share. In the third quarter last year, special items such as merger integration and a retirement program depleted earnings by 70 cents per share.
Including those charges, Bell Atlantic reported third-quarter net income of $1.2 billion, or 74 cents a share, improving from a loss of $8 million, or 1 cent per share, a year earlier.
Operating revenue rose 5 percent to $8.3 billion.
During the quarter, Bell Atlantic filed with U.S. regulators to allow it to offer long-distance service in New York State and announced an alliance with Britain's Vodafone AirTouch for cellular service.
For the first nine months of 1999, Bell Atlantic reported earnings before one-time items of $3.54 billion, or $2.24 per share, up from $3.2 billion, or $2.03 per share, a year earlier. Revenue rose 5 percent to $24.6 billion.
Shares of Bell Atlantic (BEL), which is awaiting approval of a merger with GTE (GTE), fell 9/16 to 63-3/8 Wednesday afternoon. Bell Atlantic, like many of its so-called "Baby Bell" siblings, is one of the most widely-held stocks in the country.
Sprint profit drops
St. Louis-based Sprint, the nation's No. 3 long-distance carrier, earned $359 million, or 41 cents per diluted share, down from pro forma profit of $415 million, or 47 cents per share, a year earlier.
Sprint's First Call earnings consensus was 42 cents per share. Sprint reported pro forma results for the previous year to account for the spin-off of Sprint PCS, its mobile phone subsidiary.
Revenue rose 7 percent to $4.34 billion.
Deregulation in the long-distance business has caused pricing pressure for Sprint and its leading rivals. Sprint offers 5-cents-a-minute pricing during evening hours and weekends.
Bath of Lehman Brothers said Sprint's embattled Global One venture with Germany's Deutsche Telekom and France Telecom, and the Sprint ION high-speed data service have dampened the company's overall earnings.
In the first nine months of the year, Sprint earned $1.16 billion, or $1.33 a share, up from $1.13 billion, or $1.29 a share, a year earlier. Nine-month revenue rose 7 percent to $12.8 billion.
For its part, despite tapping a hot cellular phone market, Sprint PCS reported a loss of $615 million, or $1.31 per share, compared with a pro forma loss of $176 million, or $1.04 per share, a year earlier. Revenue rose 164 percent to $844 million.
Sprint PCS added a record 720,000 new subscribers in the third quarter, bringing its total customer base to about 4.7 million, more than twice the level of a year earlier.
Shares of Sprint (FON), which earlier this month agreed to a $129 billion buyout by MCI WorldCom (WCOM), rose 3/16 to 64. Sprint PCS (PCS) shed 5/16 to 73-3/16.
BellSouth's net rises 25 percent
Atlanta-based BellSouth said its strength in fast-growing markets and demand for data, Internet and digital service helped lift third-quarter operating profit to $972 million, or 51 cents per diluted share, from $814 million, or 41 cents a share, a year earlier.
Analysts had expected BellSouth to earn 50 cents a share, according to First Call. Operating revenues rose 9 percent to $6.42 billion.
The results exclude one-time charges related to BellSouth's sale of a cellular business, tax issues and currency exchange-related losses. Including its one-time items, Bell South reported earnings of $1 billion, or 53 cents per diluted share.
"Our financial performance didn't skip a beat in the third quarter," said Duane Ackerman, BellSouth chairman and CEO. our revenue and earnings gains demonstrate the advantages of operating in high-growth markets, both in the U.S. and internationally."
BellSouth said it reached the 10-million mark in subscribers for its wireless business in the quarter.
For the first nine months of the year, BellSouth reported operating earnings of $2.8 billion, or $1.48 per diluted share, up from $2.4 billion, or $1.22 per share, in the year-ago quarter. Operating revenue rose 9 percent to $18.5 billion.
BellSouth (BLS) shares rose 1/2 to 43-1/8 Wednesday afternoon. 
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