RESEARCH ALERT - Telecoms views cut after Sprint
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NEW YORK, April 18 (Reuters) - JP Morgan analyst Marc
Crossman lowered his earnings outlook on several
large-capitalization telecommunications stocks following
Sprint Corp.'s 72-percent drop in first-quarter
earnings and lower forecasts for the year.
"On the heels of a negative earnings report for Sprint in
which local voice, data, and Internet growth were well below
expectations, we are lowering our estimates" on several stocks,
Crossman said.
"Although Sprint has a number of internal issues that are
causing it to lose significant share, we believe that the
severity of the revenue slowdown has negative implications for
industry growth rates," Crossman said. The firm said the
economy may not recover in the second half of the year, which
will hurt both voice and data revenue growth and make back-end
load earnings targets difficult to meet.
The firm lowered its earnings forecasts on Sprint below the
company's reduced outlook. It expects Sprint to earn $1.27 a
share in 2001, below the company's guidance of $1.31 to $1.39 a
share.
"We are not convinced that Sprint will be able to
accelerate its IP (Internet protocol) revenues from 14 percent
growth this quarter to 40 percent growth in the second half
because the estimates are predicated upon a significant ramp up
in hosting," Crossman said.
The firm believes there is enough hosting capacity to meet
demand for the next five years. Also, JP Morgan said it is
skeptical of Sprint's ability to ramp up revenues for its ION
(integrated on-demand network) and fixed-wireless services.
JP Morgan cuts its 2001 earnings forecast on SBC
Communications INc. to $2.37 a share, from $2.54 a
share. Its new forecast is 4 percent below the current Wall
Street consensus of $2.47 a share.
"We would characterize the possibility (that) SBC lowers
(its) numbers on the first quarter conference call next week
as extremely high," Crossman said.
The firm cut its 2001 forecast on Qwest Communications
International Inc. 3 percent below the current Wall
Street consensus to 57 cents a share, from 59 cents a share.
On WorldCom Inc. it lowered its 2001 forecast 4
percent below consensus to $1.07, from $1.17 a share. It left
its 2001 earnings forecast on AT&T Corp. unchanged since
its estimate is already 35 percent below consensus.
"Even though we are so far below consensus on AT&T, we
continue to believe that its diversified portfolio of
businesses, coupled with the execution of its break-up plan
provide for an attractive near-term investment vehicle,"
Crossman said.
Shares of Sprint fell 19 cents to $21.85. AT&T fell 30
cents to $21.55. SBC lost 73 cents to $42.44. Qwest gained 31
cents to $36.55. WorldCom gained 53 cents to $19.64.
REUTERS
Rtr 14:08 04-18-01 |
