Bell Atlantic, Worldcom Results Meet Forecasts
Two major telephone companies, Bell Atlantic Corp. and Worldcom Inc., reported first-quarter earnings in line with Wall Street’s expectations, but their stocks reacted differently to the news.
Bell Atlantic, the nation’s biggest regional phone company, said net income rose 11%, to $1.04 billion, or $1.32 a diluted share, from a year earlier, as it installed more phone lines, increased traffic on its network and added more wireless customers.
Revenue at the New York-based company gained 3% to $7.65 billion. Sales in its core telephone business rose just 2.4%, wireless revenue grew 21% and international sales jumped 57%.
Bell Atlantic said it boosted phone lines by 4.3% to about 40.4 million, and that traffic, or minutes of use on the network, rose 8.5%. Revenue from wireless services rose 21%.
Jackson, Miss.-based Worldcom, which is buying MCI Communications Corp., said first-quarter profit rose to $193 million, or 18 cents a diluted share, from pro forma net income of $13 million, or 1 cent, a
year earlier. Wall Street was expecting 17 cents a share.
Revenue jumped 38% to $2.35 billion, due to growth in its core long-distance business and the acquisitions of CompuServe Network Services and ANS Communications, Worldcom said.
International revenue increased 59% to $260 million, and Internet revenue was $392 million, up 82% from restated results a year earlier.
Bell Atlantic’s stock lost $3.38 to close at $94.63 on the New York Stock Exchange.
Worldcom stock rose 75 cents to close at $44.38 on Nasdaq.
Bell Atlantic stock fell on concerns about sluggish revenue growth in its core telephone business and lackluster results in its wireless business from growing competition, analysts said.
Some analysts are concerned that the company’s acquisition of Nynex Corp. last year may be holding back Bell Atlantic’s growth.
“Bell Atlantic and the other Bells have come in with earnings and revenues that were not short of expectations but that did not blow your wheels,” said Anthony Ferrugia, an analyst with A.G. Edwards.
“Sometimes status quo is somewhat of a negative,” Ferrugia said.
Bell Atlantic said mandated price cuts and high costs related to severe winter ice storms hurt its core telephone results, but were more than offset by strength in its global wireless business and international revenue.
“WorldCom had a terrific quarter, demonstrating the positive benefits of its strong revenue mix and its focus on high-growth segments of the business,” said Rob Donahue, an analyst with Salomon Brothers Asset Management.
