BellSouth cuts 2002 view; cites wireless, economy
Thursday August 29, 8:10 pm ET
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ATLANTA, Aug 29 (Reuters) - BellSouth Corp. (NYSE:BLS - News), the No. 3 U.S local telephone company, said on Thursday its 2002 earnings would fall below Wall Street's already-reduced expectations due to a restructuring and weak revenues in its wireless business, and the turbulent economy.
BellSouth said it expects its 2002 earnings to be in the range of $2.06 to $2.13 a share, or 7 cents a share below its previous guidance. Wall Street analysts expect the company to earn $2.14 a share, according to research firm Thomson First Call.
The Atlanta-based company has cut its full-year forecast at least four times this year. BellSouth and other Baby Bells have been slammed by the weak economy and a shift to electronic mail and wireless phones, which has reduced the number of telephone access lines in service.
BellSouth blamed the latest change in its earnings guidance on weak wireless telephone revenues, the cost of cutting jobs at its Cingular Wireless joint venture, and continued economic weakness in its domestic business.
"We've ... seen signs that recovery and growth are not imminent," BellSouth Chief Financial Officer Ron Dykes told analysts last month in a conference call. "Business failures and bad debt continue to take their toll.
Shares of BellSouth, the dominant local telephone company in nine Southeastern states from Kentucky to Florida, closed Thursday at $24.25, down 19 cents, on the New York Stock Exchange. The stock has fallen about 36 percent this year, underperforming the Standard & Poor's 500 Index by about 20 percent.
Cingular Wireless, BellSouth's wireless joint venture with SBC Communications Inc. (NYSE:SBC - News), last week said it would cut 3,000 jobs, or 7.5 percent of its work force, to cut costs. Cingular, the No. 2 U.S. wireless phone company, said severance and other costs for the job cuts would cost less than $70 million.
Cingular Wireless had added more new subscribers than expected in the second quarter, helped by lower customer turnover and the introduction of new price plans earlier in the year. Analysts had expected Cingular's third quarter results to get a boost from its recent launch of service in New York City, the nation's biggest wireless market.
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