SBC Profit Flat; Internet, Marketing Expenses Cited
SBC Communications Inc., the No. 2 U.S. local telephone company, said Monday its third-quarter operating profit was virtually flat as it spent heavily on its Internet infrastructure and long-distance marketing.
Despite strong data and wireless revenue, SBC posted profit of $1.96 billion, or 57 cents a share, compared with $1.97 billion, or 57 cents a share, a year ago. The earnings were a penny higher than the analysts’ consensus estimate.
SBC, whose holdings include Pacific Bell, said revenue rose 8% to $13.45 billion. Data transmission sales climbed 46%, while mobile-phone subscriber revenue grew 20%.
The company said profit was weakened by spending on its project to build digital subscriber lines over regular copper phone lines.
It also was weighed down by marketing expenses as it entered the long-distance market in Texas. The company said, however, that it had 1 million long-distance customers in the state as of Oct. 18.
Separately, SBC said it expects the city of Dallas to be one of the first major customers of its so-called IP telephony services.
The city is expected to approve a redesign of its municipal phone network shifting as many as 8,000 phones from a conventional PBX network to one that is Internet-based. That will theoretically give users more flexible features, including unified voicemail and e-mail.
The contract reflects SBC’s plans to offer IP telephony services to all business customers using basic technology from Cisco Systems, Nortel Networks and Lucent Technologies. Some of these services will be available by the end of the year for customers planning to migrate to IP telephony without fully scrapping their PBX systems.
Shares in San Antonio-based SBC rose $3.38, or 6%, to close at $54.13 on the NYSE.
At a Glance
Other earnings, excluding one-time gains or charges unless noted, include:
* American Express Co.’s third-quarter profit rose 14% to $737 million, or 54 cents a share, matching estimates, as revenue rose 13% to $5.55 billion.
* Conoco Inc. said third-quarter earnings doubled to $523 million, or 83 cents a share, beyond forecasts of 76 cents, on higher prices for oil and natural gas as well as improved returns from its refining and marketing businesses. Revenue jumped 43% to $10.7 billion.
* Corning Inc. said third-quarter earnings more than doubled to $317 million, or 35 cents a share, from $148 million, or 19 cents, a year ago, beating upwardly revised forecasts by a penny. Sales rose 55% to $1.94 billion.
* HCA-Healthcare Corp. said its third-quarter operating profit rose 20% to $186 million, or 33 cents a share, 2 cents better than forecasts, as the hospital operator admitted more patients and charged managed-care insurers higher prices. Revenue rose 5% to $4.09 billion.
* Minnesota Mining & Manufacturing Co. reported an 8% rise in third-quarter profit to $499 million, or $1.25 a share, a penny better than forecasts, boosted by strong sales in Asia. The maker of products ranging from Post-It Notes to telecommunications equipment said sales rose 6.4% to $4.25 billion.
* RadioShack Corp. said third-quarter profit grew 29% to $77.1 million, or 39 cents a share, a penny better than forecasts, as the retailer of digital televisions, music systems and other electronics cut prices to boost sales. Revenue was up 19% to $1.14 billion.
* Safeco Corp.’s third-quarter profit grew 25% to $12.2 million, or 10 cents a share, as losses from storms and other catastrophes declined and the insurer raised rates. Analysts had cut their estimates to 6 cents from 25 earlier this month after a company warning. Revenue rose 4.6% to $5.43 billion.
* Southern Co., the largest U.S. electricity producer, said third-quarter earnings rose 7.4% to $668 million, or $1.03 a share, beyond the average estimate of 92 cents, as revenue more than doubled to $7.48 billion from $3.74 billion.
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Bloomberg News contributed to this report.
