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Sprint dials up record
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February 4, 1997: 6:32 p.m. ET
Long distance telephone company reports record quarterly earnings
From Correspondent Irv Chapman
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NEW YORK (CNNfn) -- The market for long distance phone service is still booming and Sprint Corp., once an upstart and now one of the major players, is reaping the rewards.
The carrier Tuesday reported earnings of $245.3 million, or 57 cents a share, in the fourth quarter. That compares to a loss of $343.2 million a year ago.
Revenues in the quarter came in at $3.6 billion, compared to $3.3 billion a year ago. For the year, revenues equaled $14 billion, up from $12.8 billion last year.
While its core long distance unit reported double-digit revenue growth, analysts say investments in a variety of areas are paying off.
"They're hitting on all cylinders in the long-distance market -- high-end business, small business and residential. They've got great brand recognition. I'd say all the moves they made in 1996 have paid them dividends," said Michael Elling, telecommunications analyst at Prudential Securities.
Those moves include a link-up with Tandy Corp. to put Sprint's products into 5,000 Radio Shack stores, a deal to sell Sprint Internet software in Blockbuster Video stores and the Global One deal with France Telecom and Deutsche Telecom.
The transatlantic Global One investment took $82 million from Sprint's bottom line in 1996. However, that pales in comparison to the $750 million being invested by its partners.
Sprint also took a $192 million hit from its continuing investment in its personal communication services wireless venture.
The company's goal is to eventually make PCS services available nationwide. By the end of 1997, 40 percent of the country is scheduled to have access.
Philip Sirlin, telecommunications analyst at Schroder Wertheim, said PCS will be a success, but building out the network will take time and lots of money. (150K WAV) or (150K AIFF)
Sprint has said PCS will not be a financial success for at least five years.
Meanwhile, the company faces growing competition in its core long distance business, beginning with AT&T's effort to win back customers by cutting prices.
The stiff competition outlook has led Sprint to forecast reduced earnings this year. Analysts say that forecast will likely prevail for several years until the new investments hit pay dirt.
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Sprint
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