Phone Firms Beat Expectations

Telephone companies led by AT&T; Corp. are giving a jolt this week to the lethargic and long-depressed telecommunications industry.

The nation’s long-distance giant and the AT&T; Wireless unit it spun off 21 months ago reported first-quarter earnings Wednesday that far exceeded Wall Street’s expectations and helped send stocks in the long-suffering industry soaring.

“What this really means is that the companies have been tending to their business, managing costs and allowing the companies to position themselves in the marketplace,” said analyst Rick Black at Blaylock & Partners in New York.

But analysts don’t see the quarterly results -- including those from BellSouth Corp. and, on Tuesday, from Verizon Communications Inc. -- as evidence that the industry has fully recovered.

If anything, Wednesday’s stock surge -- AT&T; shares rose as much as 24% at one point -- is more a correction for the recent sell-off by investors, said analyst F. Drake Johnstone at Davenport & Co.

And regardless of whether SBC Communications Inc., the dominant local carrier in California, posts expected earnings today of 36 cents a share, analysts say it lags behind BellSouth and Verizon. SBC has been hurt mainly because it got into long-distance service late in California and still isn’t approved to offer the service in five Midwest states, where AT&T; and others are grabbing its local customers.

For the first quarter, AT&T; posted net income of $571 million, or 73 cents a share, compared with a loss of $975 million, or $1.32, in the same period last year. Sales fell 5% to $9 billion from $9.5 billion a year earlier.

The company’s earnings benefited from the adoption of a new accounting standard. Without that one-time gain, AT&T; earned 67 cents a share, still far higher than the 52 cents a share analysts expected, according to a survey by Thomson First Call.

The performance -- and AT&T;’s statement that it could beat current estimates of full-year sales and profit margins -- helped boost the shares $3.20, or 23%, to $17.01 on the New York Stock Exchange.

AT&T; Wireless, the nation’s largest publicly traded cellular phone company, reported quarterly net income of $135 million, or 5 cents a share, contrasted with a loss of $178 million, or 7 cents, last year.

Revenue rose 9% to $3.9 billion from $3.6 billion last year.

In other telecom earnings:

* BellSouth, the No. 3 U.S. local telephone company, swung to a quarterly profit but its revenue fell slightly as demand for telephone and data services softened. Net income totaled $1.2 billion, contrasted with a loss of $154 million a year earlier. Revenue eased to $5.52 billion from $5.53 billion a year earlier.

* Qualcomm Inc., which sells mobile phone chips, posted higher quarterly profit and raised its full-year earnings estimate for the second time based on strong demand for its advanced cell phone chips. Qualcomm reported net income of $103 million, or 13 cents a share, compared with $44 million, or 5 cents, a year earlier. Revenue rose to $1.0 billion from $659 million.

* Equipment maker Lucent Technologies Inc. posted its 12th straight quarterly loss but came in ahead of analysts’ expectations. Lucent reported a net loss of $553 million, or 14 cents a share, for its fiscal second quarter. It lost $535 million, or 16 cents, in the year-earlier quarter.

Reuters was used in compiling this report.