Sprint, Qwest losing sales to their rivals

Sprint Nextel Corp. and Qwest Communications International Inc. posted lower second-quarter sales amid heightened competition for telephone customers.

Sprint, the third-biggest U.S. wireless carrier, said Wednesday that it recorded a $344-million loss as sales declined 11%.

Qwest, No. 3 in the U.S. local-phone market, said profit fell 24% and sales slipped 2.3%.

The carriers are losing subscribers to Verizon Wireless and AT&T Inc. and are looking for ways to revive growth. Qwest home-phone users are canceling service and switching to mobile phones, and Sprint clients are defecting to competitors amid dropped calls and complaints.

Sprint shares fell $1.21 to $7.34, while Qwest dropped 14 cents to $3.45.

Sprint reported a loss of 12 cents a share, its third straight quarterly loss, compared with net income of $19 million, or 1 cent a share, a year earlier. Sales declined to $9.06 billion, trailing the $9.14-billion average of estimates compiled by Bloomberg.

About 776,000 contract subscribers left Sprint last quarter. The company, based in Overland Park, Kan., predicted higher defections in the next three months.

Qwest’s net income fell to $188 million, or 11 cents a share, from $246 million, or 13 cents a share, a year earlier. Sales declined to $3.38 billion, in line with the average estimate in a Bloomberg survey.

Qwest lost 1.08 million phone lines from a year earlier, an 8.2% drop. Internet subscriptions grew 14% to 2.73 million customers, the Denver-based company said.

Higher rates lift PG&E earnings

PG&E Corp., owner of California’s largest utility, said second-quarter profit rose 8.9% on higher rates.

Net income increased to $293 million, or 80 cents a share, from $269 million, or 74 cents a share, a year earlier, the San Francisco-based company said. Revenue climbed 12% to $3.58 billion.

California utilities are spending more on electricity generators and power lines to bolster reliability and meet rising demand from a growing population.

Last year, California regulators said the company’s Pacific Gas & Electric utility could raise rates by $213 million in 2007 and by $125 million annually from 2008 through 2010.

The company’s per-share earnings missed by 2 cents the average of analyst estimates compiled by Bloomberg. Shares of PG&E fell 70 cents to $37.80.

The company’s Pacific Gas & Electric utility provides power to about 5.1 million homes and businesses and natural gas to 4.3 million. Electricity revenue rose 12% in the second quarter, compared with a year earlier, PG&E said. Natural-gas revenue rose 13%.

Watson profit up on lower costs

Watson Pharmaceuticals Inc. reported a 66% gain in second-quarter profit on lower expenses as it struggled to expand sales in the increasingly competitive U.S. market for generic drugs.

Net income rose to $60.3 million, or 53 cents a share, from $36.4 million, or 33 cents a share, a year earlier, the Corona-based company said. Revenue rose 3% to $622.6 million, trailing the $627.7-million average estimate of analysts surveyed by Bloomberg.

Watson has been focusing on U.S. sales as rivals Mylan Inc. and Barr Pharmaceuticals Inc. fund growth with acquisitions in other countries. Generics already account for 65% of prescriptions dispensed in the U.S., and analysts say drug makers will need to reach faster-growing and more profitable markets overseas to survive.

“Watson is still too highly exposed to the U.S. generics market,” said Corey Davis, an analyst at Natixis Bleichroeder in New York.

Watson shares fell 60 cents to $29.20. The company raised its forecast for full-year net income by 20 cents to the range of $1.90 to $2 a share and reiterated its estimate of $2.5 billion in annual revenue.

Revenue from generic drugs rose 9% to $376.6 million in the quarter. Revenue from brand-name drugs increased 7% to $118 million, and the distribution business lost 13% to $128 million because of fewer introductions of new products.

From Times Wire Services