Sprint Profit Falls 11% as Sales Lag; Verizon Up 1.4%
Verizon Communications Inc. said fourth-quarter earnings crept up 1.4%, helped by the addition of long-distance telephone customers in New York, while Sprint Corp. said profit declined on weak sales.
Verizon, the nation’s biggest local phone company, said profit from operations rose to $2.11 billion, or 77 cents a share, in its fourth quarter, matching the average estimate of analysts polled by First Call/Thomson Financial.
Verizon’s sales rose 6.7% to $16.9 billion, driven by growth in long-distance, wireless and data transmission services. Verizon spent more to achieve that growth, though, with expenses climbing 8.4%.
Competition from Verizon and the other local phone carriers is hurting Sprint and other long-distance providers.
Sprint, the No. 3 U.S. long-distance phone company, said fourth-quarter operating profit fell 11% to $348 million, or 41 cents a share, but beat analysts’ expectations of 39 cents.
The results excluded one-time items such as $238 million in costs from Sprint’s failed merger with WorldCom Inc.
Sales edged down 0.7% to $4.39 billion in the latest quarter, hurt by a 14% drop in consumer long-distance revenue. Operating expenses rose 9.4% to $4.03 billion.
While Sprint’s total long-distance sales fell 1.5% in the quarter, Verizon added 240,000 long-distance customers in New York and now holds a 20% share of the state’s residential long-distance market. It began selling the service there a year ago.
At Sprint PCS, Sprint’s wireless unit that trades as a tracking stock, losses narrowed to $512 million, or 53 cents a share, from $706 million, or 75 cents, a year ago. Results matched the average estimates from First Call/Thomson Financial. Sprint PCS sales jumped 83% to $1.94 billion.
Shares in New York-based Verizon rose 5 cents to $55, while Westwood, Kan.-based Sprint fell 25 cents to close at $24.55, both on the New York Stock Exchange.
At a Glance
Other earnings, excluding one-time gains or charges unless noted:
AUTO COMPONENTS:
* Federal-Mogul Corp. posted a loss from operations of $69.2 million, or 99 cents a share, contrasted with a profit of $67 million, or 87 cents, a year ago, as sales dropped 14% to $1.35 billion. Federal-Mogul and other auto parts manufacturers are seeing weaker results as auto makers cut back production. The company had warned that its loss would be wider than forecast. The latest results exclude $268.5 million in one-time charges for a reorganization, adjustment of asbestos liabilities and other items. The company paid about $338 million to asbestos injury claimants last year, and that’s expected to rise to $350 million this year. Federal-Mogul has set aside $1.2 billion to pay for asbestos claims and carries insurance valued at about $800 million to take effect once reserves are exhausted..
* Lear Corp., the largest maker of vehicle interiors and seats, said fourth-quarter earnings fell 5.1% to $87.3 million, or $1.35 a share, and said profit in the current quarter and full year will be lower than expected as U.S. auto makers cut production. The fourth-quarter results beat analysts’ expectations of $1.32 a share. Sales fell 2.9% to $3.36 billion.
OTHER INDUSTRIES:
* Calgene Corp., a biotechnology company that develops cancer and immune system therapies, posted its first quarterly profit on higher sales of its lead drug, Thalomid, and said it would be profitable in 2001. Calgene said it earned $3.7 million, or 4 cents a share, in its fourth quarter, a penny better than analyst forecasts, as revenue more than doubled to $27.3 million from $12.3 million. The company had lost $4.8 million, or 11 cents, in the year-earlier period.
* Colgate-Palmolive Co.’s fourth-quarter profit rose 10% to $286.7 million, or 46 cents a share, a penny better than forecasts, on a 2.9% rise in sales to $2.41 billion.
* Digex Inc. said its fourth-quarter loss widened to $41.4 million, or 65 cents a share, from a loss of $22.4 million, or 36 cents, a year ago. Analysts expected a deeper loss of 69 cents. The company, which runs Web sites for such companies as UAL Corp.’s United Airlines and Fannie Mae, said sales climbed to $57.9 million from $21.7 million. Digex also said it expects a first-quarter loss of 73 cents to 77 cents a share, rather than the 71-cent loss analysts have anticipated.
* Flowers Industries Inc., which owns 55% of Keebler Foods Co., said fourth-quarter profit rose 7.4% to $15.9 million, or 16 cents a share, as sales rose 4.8% to $1.06 billion. The results missed forecasts of 21 cents a share.
* Keebler Foods Co., which is being acquired by Kellogg Co., said profit grew 23% to $53.7 million, or 61 cents a share, in the fourth quarter, beating analyst expectations of 56 cents. Keebler, whose brands include Cheez-It crackers and Famous Amos cookies, said sales rose 5.4% to $645.3 million.
* Pittston Co., the owner of Brink’s security and the BAX freight business, said earnings plunged 81% to $8.4 million, or 16 cents a share, as demand for its transportation and management services slowed. Revenue fell 3% to $995 million. The company also said it cut 350 jobs at its BAX unit. * Primedia Inc. said its fourth-quarter loss narrowed to $18.4 million, or 11 cents a share, from $19 million, or 13 cents, a year before. Analysts had expected a much smaller loss of 6 cents at the magazine publisher. Sales from continuing businesses rose 11% to $456 million.
* Quaker Oats Co.’s fourth-quarter profit rose 15% to $52.1 million, or 37 cents a share, matching forecasts, and the company said earnings in its first quarter will miss forecasts. Quaker, which is being acquired by PepsiCo Inc., said revenue rose 4.9% to $996 million, led by surging sales of Gatorade. Quaker expects earnings in the current quarter to be unchanged from the 77 cents it earned in the year-earlier period. Analysts were expecting 85 cents.
* Reebok International Ltd. said fourth-quarter profit surged to $6.2 million, or 11 cents a share, from $426,000, or 1 cent, a year ago, beating analysts’ expectations of 7 cents. Sales were flat at $622.5 million as weakness overseas because of the strong dollar offset sales gains in the U.S.
* Tommy Hilfiger Corp. said fiscal third-quarter profit fell 28% to $42.7 million, or 47 cents a share, as sales declined 8.7% to $475.8 million. The results were 2 cents better than analysts’ forecasts.
