PacTel Cites Rate Cut Order as Net Dips 3.8%
Pacific Telesis’ second-quarter earnings fell 3.8% from the same period a year earlier, slipping to $272.3 million on revenue that rose 1% to $2.28 billion, the company said Monday.
Donald E. Guinn, chairman and chief executive of the San Francisco-based parent of Pacific Bell, attributed the declining earnings largely to a $191-million rate-reduction order by the California Public Utilities Commission.
The company also noted that its expenses have risen 4.2% during the first six months of 1987. That includes a 15% increase in depreciation, reflecting the company’s continued phase-out of old telecommunications equipment.
For the six months, Pacific Telesis’ earnings were off 3.4% to $538.2 million on revenue that was flat at $4.48 billion.
In March, the PUC ordered a cut in Pacific Bell’s revenue to reflect its savings from lower interest and inflation rates. The phone company had maintained that no more than a $76-million reduction was justified. The PUC is reviewing its decision, with a final ruling due by year-end.
The agency, however, could decide to cut Pacific Bell’s revenue further. At worst, that would mean cuts totaling $225.1 million if the commission accepts the recommendation of its public staff division, which represents phone customers.
On a brighter note, the company enjoyed increased long-distance revenue in the second quarter. Guinn attributed most of the gain to increased long-distance calling in the company’s California and Nevada service areas.
Pacific Telesis’ cash flow has been strong enough to enable it to finance its own expansion since the beginning of 1986, Guinn said.
In New York Stock Exchange trading, Pacific Telesis closed at $25.50, down 50 cents.
Results were mixed at the two other former Bell companies that reported quarterly results Monday. Philadelphia-based Bell Atlantic reported that its profit climbed 6.1% to $326.1 million on revenue that rose 6.8% to $1.64 billion. At Atlanta-based BellSouth, profit fell 6.4% to $382.3 million on revenue that was up 3.4% to $3.03 billion.
