Phone Companies’ Earnings Mixed : Gains for Pacific Telesis, US West, MCI; Loss at US Sprint
Two regional telephone companies, including San Francisco-based Pacific Telesis, reported strong first-quarter earnings on Tuesday. The picture was mixed in the long-distance business, however, with MCI Communications posting gains while US Sprint continued its string of losses.
Pacific Telesis, citing savings from early retirements and the retrenchment of its computer sales operation, reported first-quarter earnings of $300 million, up 28.2%. Revenue rose 7.9% to $2.31 billion.
“We started 1988 on a strong financial base--one that is giving us positive results for the present and providing financial flexibility for the future,” said Donald E. Guinn, chairman and chief executive of Pacific Telesis, the parent of Pacific Bell, California’s biggest phone company. Guinn, in his mid-50s, will begin early retirement later this year but has yet to reveal the date.
The company’s financial strength was demonstrated by its ability to continue financing its needs internally, without seeking outside funds from lenders or investors, Guinn said.
Denver-based US West reported first-quarter earnings of $240.5 million, up 17.8% from a year earlier. Revenue totaled $2.2 billion, up 5.6%. US West owns Mountain Bell, Pacific Northwest Bell and Northwestern Bell.
International Boost
MCI Communications, the nation’s second-largest long-distance carrier, behind AT&T;, continued the healthy earnings growth begun last year, following the losses that marked 1986. First-quarter earnings reached $69 million, nearly triple the profit of $25 million a year ago, on sales of $1.3 billion, up 18.4%.
Washington-based MCI said revenue was boosted by expansion of international services since Jan. 19, when its customers could begin calling anywhere in the world where direct-dial service is available. The company has also entered the operator-assistance market and registered growth in its toll-free “800” services.
The nation’s No. 3 long-distance carrier, US Sprint, continued to lose money for its 50-50 owners, GTE and United Telecommunications.
US Sprint, which has about 5 million customers, had revenue of $759 million, up 23%, but had a pretax operating loss of $138 million, compared to a $116-million shortfall in the last quarter of 1987. The widened loss was attributed to marketing costs and billing problems stemming from difficulties in blending the company’s computer systems.
Despite US Sprint’s loss, GTE and United Telecommunications reported improved earnings. GTE, based in Stamford, Conn., and the parent of GTE California, said earnings rose slightly to $286.3 million, up from $264.7 million a year earlier, on revenue of $3.9 billion, up from $3.7 billion.
United Telecommunications said its sales increased 7%, to $755 million, in the first quarter while earnings rose to $34.5 million, up more than twofold from $13.5 million.
