Copyright 2005 AFX News Limited
January 26, 2005 Wednesday 09:17 AM Eastern Time
From Lexis Nexis
SBC Communications said Wednesday that fourth-quarter net income fell slightly, but revenue rose for the third quarter in a row on the strength of data and high-speed Internet sales.
In related news, the company said it expects to eliminate 7,000 jobs in 2005, or 4.4 percent of its 163,000-member workforce. SBC said the cuts would take place “primarily” through attrition, which means leaving jobs unfilled when workers retire or leave the company.
SBC had said in November that it was planning to cull 10,000 positions by the end of 2005.
The savings from a smaller workforce will help to improve operating profit margins to 15 percent to 16 percent in 2005, the company said.
SBC and other phone carriers have been slashing expenses in the face of stiffer competition and slow sales growth. Most of the cuts have occurred in the traditional phone business, as companies seek to take advantage of higher growth in the wireless and Internet markets.
On Tuesday, SBC stock, a component of the Dow industrials, fell 9 cents to $24.45.
In the latest quarter, SBC posted net income of $754 million, or 23 cents a share. That’s down from $905 million, or 27 cents, a year ago. Revenue rose 3.1 percent to $10.29 billion from $9.98 billion.
Those numbers exclude results from Cingular Wireless, the company’s joint venture with BellSouth. SBC owns a 60 percent stake.
Excluding onetime costs and gains, the phone giant said it earned $1.1 billion, or 34 cents a share. SBC was expected to earn 33 cents a share, according to the consensus of analysts surveyed by Thomson First Call.
SBC incurred $640 million in expenses to pay severance to former employees and to account for its share of Cingular’s costs to integrate the recently purchased AT&T Wireless. Those charges were partly offset by $63 million in tax-related gains.
As reported Monday, the company’s wireless Cingular unit added 1.8 million net subscribers in the fourth quarter to end the year with a nation-leading 49 million.
Elsewhere, SBC added 425,000 customers to its digital subscriber line service, which delivers high-speed Internet access over ordinary copper lines. It now has a total of 5.1 million.
Aided by strong DSL growth, the company boosted data revenue by 10.5 percent to $2.88 billion.
The company also added 1.1 million long-distance lines for a total of 20.9 million. Revenue in that segment grew 23.5 percent to $868 million from the year-earlier quarter. In addition, SBC signed up 97,000 customers for Dish Network’s satellite TV service.
The company now markets the service to 323,000 customers, all of whom have signed up in the last nine months.
SBC includes subscription to satellite TV as part of a discount “bundle” of services – local, long-distance, Internet – aimed at keeping customers from leaving.
In 2005, SBC plans to start building an ultra-modern fiber network over which it plans to sell its own TV service.
The strong performances of the DSL, data and long-distance units drove wireline revenue up 3.6 percent even though SBC continued to lose local phone lines.
In the last three months of the year, SBC lost 580,000 local lines to end 2004 with 52.4 million.
Yet the decline in local retail lines slowed considerably. SBC lost 192,000 lines in the fourth quarter, down from 259,000 in the third quarter and 424,000 in the year-ago period.
The loss of local lines has been expected to slow temporarily amid new federal rules that make it more difficult for rivals to lease access to the network of BellSouth to resell phone service.
Still, stiffer competition from cable rivals and a move by some customers to alternative wireless or Internet technologies is likely to further erode the local phone businesses of the large Bell carriers.
This story was supplied by MarketWatch. For further information see www.marketwatch.com.