U.S. telecoms seen posting strong Q3 results
Friday October 2, 4:11 pm Eastern Time
By Jessica Hall
NEW York, Oct 2 (Reuters) - U.S. telecommunications companies are expected to meet or slightly exceed Wall Street's third quarter earnings estimates -- some rare, positive news at a time when other industries have been battered by emerging market losses and earnings shortfalls, analysts said.
The U.S. phone companies, especially the regional Bell operating companies, benefit from having a mostly domestic focus and relatively stable customer base. Demand for new phone lines, additional services such as Caller ID and Internet access will also bolster results, analysts said.
''It's an industry that is built on recurring revenues -- it's very hard to have your earnings and revenues suddenly change course,'' said Richard Klugman, a telecommunications analyst with While many U.S. telecommunications companies have some international investments, they ''have far less exposure to overseas markets than a Procter & Gamble or Coke would,'' so they are less vulnerable to the global market turmoil, Klugman said.
''Generally I think they (the major telecom companies) will be unlikely to disappoint, compared to other groups who have had some bleak news during this preannouncement time. Most of them will have reasonably good volume gains, subscriber gains,'' said Robert Wilkes, a telecommunications analyst with Brown Brothers Harriman.
The Baby Bells are expected to show average line growth of about four percent as consumers clamor for extra lines for fax machines, Internet access and teen phone lines. Brief labor strikes at US West Inc. (NYSE:USW - news) and Bell Atlantic Corp. (NYSE:BEL - news) will not have a material effect on their quarterly results, analysts said.
Long-distance carriers AT&T Corp. (NYSE:T - news) and Sprint Corp. (NYSE:FON - news) also may report better-than-expected earnings, as AT&T sees improving revenue trends and improved cost controls and Sprint posts strong long distance revenue growth, Sanford Bernstein analyst Tod Jacobs said in a research report.
Total revenues at AT&T, the nation's largest long distance carrier, will increase about four percent as business and wireless revenue growth offset a continued decline in consumer revenues, analysts
said.
AT&T's ongoing ''cost cutting efforts are going to be an important contributor to improvements,'' said Brown Brothers' Wilkes.
AT&T's wireless revenues will increase about 15 percent due to the success of the company's national one-rate pricing plan, analysts said.
The new MCI WorldCom Inc. (Nasdaq:WCOM - news) will face some charges and costs related to the $40 billion merger of MCI Communications Corp. and WorldCom Inc, which closed on Sept. 14.
Excluding those costs, MCI WorldCom's earnings are expected to triple as the company benefits from its strong position in the fastest-growing segments of the industry such as data, Internet and international, analysts said.
MCI WorldCom's traffic volume growth will likely lead the industry, but ongoing costs in the former MCI's local telephone business may be a slight drag on results, analysts said.
COMPANY......................Q3 estimate..Year ago...Date
expected Ameritech Corp. (NYSE:AIT - news)..........$0.58..$0.52.....Oct 15 AT&T Corp. (NYSE:T - news).................$0.95..$0.71..week of Oct. 20 Bell Atlantic Corp. (NYSE:BEL - news)......$0.68..$0.62..Oct. 21 BellSouth Corp. (NYSE:BLS - news)..........$0.82..$0.71..Oct. 20 GTE Corp. (NYSE:GTE - news)................$0.83..$0.79..Oct. 14 MCI WorldCom Inc. (Nasdaq:WCOM - news).......$0.22..$0.07..Oct. 22 SBC Communications Inc. (NYSE:SBC - news)..$0.53..$0.45..Oct. 15 Sprint Corp. (NYSE:FON - news).............$0.44..$0.49..Oct. 20 Qwest Comm Int'l Inc. (Nasdaq:QWST - news)..($0.05).$0.07..Oct. 20 U S West Inc. (NYSE:USW - news)............$0.75..$0.66..Oct. 21
* Estimates from First Call, reporting date from companies or analysts. |
