The market is hammering CSN shs on a earnings pre-announcement that
points out only a minor, temporary earnings and sales shortfall.
Also, CSN is basing this pre-announcement on just one month of sales data; its not a leap of faith to imagine better sales in the final 2 months of the quarter. Overeactions to this announcement will create a great chances to buy good a stock at low prices.
BTW, CSN has a great dividend reinvestment plan allowing members to invest in shs without paying brokerage commissions.
The text of the pre-announcement follows:
Tuesday May 26, 8:03 am Eastern Time
Company Press Release
Cincinnati Bell Issues Outlook for Second-Quarter Results
CINCINNATI--(BUSINESS WIRE)--May 26, 1998--Based on a review of its financial results
for April and its current outlook for the rest of the quarter, Cincinnati Bell Inc. (NYSE:CSN - news)
said today it expects revenues to be in the range from $550 million to $575 million, and earnings per
share to be in a range of 27 cents to 31 cents for the three months ending June 30, 1998.
Cincinnati Bell Inc.'s results for the second quarter of 1998 will include a full three months of results
from the teleservices operations of Maritz Inc. acquired on Jan. 8, 1998, and from AT&T Solutions
Customer Care, also known as Transtech, which was acquired effective Feb. 28, 1998.
Earnings for the quarter also will reflect the dilutive effect of the goodwill amortization and interest
expense associated with the Transtech acquisition and of startup losses at its Cincinnati Bell
Wireless operations. Also, the current quarter includes higher current levels of spending for
regulator-mandated telecommunications services at Cincinnati Bell Telephone and for Year-2000
compliance.
For the second quarter, Cincinnati Bell expects MATRIXX's revenues to be in the range from $210
million to $225 million and expects CBIS's revenues to be in the range from $140 million to $150
million. Combined revenues would be about $3 million lower, reflecting inter-company transactions.
In the second quarter of 1997, MATRIXX had revenues of $111 million and CBIS had revenues of
$134 million.
Combined operating income of CBIS and MATRIXX for the second quarter is expected to be in
the range from $38 million to $42 million. In the second quarter of 1997, combined operating
income was $38 million.
Cincinnati Bell said that its current outlook for the second quarter reflects lower than expected
revenues for Transtech, now known as MATRIXX's Communications Alliance Group. In particular,
the group's recent revenues from AT&T are at a run rate below the $300 million annual commitment
and below the same period in 1997. If the shortfall continues through the 12 months ending Feb. 28,
1999, AT&T has agreed to pay MATRIXX 40 percent of that shortfall. Cincinnati Bell and AT&T
are working together to establish a plan to ensure that AT&T meets its commitment to the
Communications Alliance Group.
In addition to lower than expected performance at the Communications Alliance Group, certain
other MATRIXX and CBIS business units are expected to generate revenues slightly below first
quarter levels, due to seasonal and client-specific factors.
As part of its plan to achieve its target profit margins, MATRIXX is continuing to implement its
restructuring program adopted in the fourth-quarter of 1997, which was designed to increase
productivity and improve service to clients. Separately, MATRIXX is redistributing work and
initiating salaried workforce reductions at its Communications Alliance Group to achieve the
anticipated scale benefits from integrating those operations into MATRIXX.
Additionally, CBIS and MATRIXX are evaluating opportunities to improve efficiency and reduce
costs by integrating certain operations, which could potentially result in a charge later in 1998. In the
second quarter of 1997, Cincinnati Bell Inc. reported revenues of $433 million and earnings per
share of 37 cents, excluding special credits of 2 cents per share.
Cincinnati Bell is the leader in helping communications companies and marketing-intensive
businesses worldwide compete more effectively through advanced billing, customer information and
marketing solutions, as well as the premier provider of communications services in Greater
Cincinnati.
Note: Information included in this news release contains forward-looking statements that involve
potential risks and uncertainties. Cincinnati Bell's future results could differ materially from those
discussed herein. Factors that could cause or contribute to such differences include, but are not
limited to, seasonal factors, the business and marketing strategies of Cincinnati Bell's billing and
customer management clients, and the company's ability to rapidly adjust its operations to meet
changes in business conditions. Additional information is included in Cincinnati Bell's annual and
quarterly reports to the Securities and Exchange Commission.
Contact:
Wayne Buckhout Paul Verbinnen, Judy Brennan
Cincinnati Bell Inc. or Heather Reeves
513/397-1081 Sard Verbinnen & Co.
212/687-8080
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