Sprint PCS Expects Rising Sales; FON Outlook Dims

Sprint PCS, the wireless communications division of Sprint Corp., said Tuesday that it expects sharply higher revenue in the fourth quarter and next year.

The company projects fourth-quarter revenue of about $2.8 billion and sales for 2002 of about $13 billion. The figures, fueled by an increase in subscribers, would represent 40% and 3% increases, respectively, compared with year-ago periods.

However, Sprint FON Group, which includes the company’s local and long-distance phone service, said its projected fourth-quarter earnings would fall below earlier forecasts.

At its annual investment community meeting, the Kansas City-based company said revenue growth at the PCS unit “is expected to continue to be driven by strong gains in the customer base and strong average customer revenue.”

This year, Sprint expects 4.2 million additional customers in its PCS Group, compared with 3.8 million in 2000. Next year, Sprint expects to add as many as 3.7 million.

PCS, the nation’s fourth-largest wireless provider, had third-quarter revenue of $2.65 billion, a 55% expansion over the prior year’s quarter. Yet the division reported a loss of $288 million, or 29 cents a share, in the period ended Sept. 30.

The company said its 2001 earnings before interest, taxes, depreciation and amortization would meet earlier forecasts of $1.6 billion. EBITDA for 2002 is projected to climb to nearly $3.1 billion.

The outlook for the FON Group was much poorer.

Losses largely related to its now-canceled voice and high-speed Internet unit, ION, sent fourth-quarter earnings projections down to 25 to 27 cents a share, Sprint said. Earlier expectations had been for 37 to 39 cents. Sprint PCS shares fell 29 cents to $25.15, and Sprint FON shares declined 58 cents to $21.12, both on the New York Stock Exchange.

Also Tuesday, Sprint said its fledgling data business, E:Solutions, has won its first major contract, with EBay Inc., to handle a portion of the online auction giant’s Internet traffic. Terms were not disclosed.

Before the E:Solutions announcement, a dearth of high-profile customers had triggered skepticism about Sprint’s ability to succeed in the Web-hosting business.