Sprint Corp. announced mixed results for the second quarter of 2002 Thursday, with revenue from its local and long distance phone division dipping below both analyst expectations and last year's results, while its PCS wireless group topped both last year's numbers and analyst forecasts.
For the quarter, Sprint reported consolidated revenue of US$6.83 billion, up from $6.45 billion the same quarter a year ago.
Sprint's FON group, which includes the company's local and long distance operations, as well as its Global Markets Group, posted revenue of $3.97 billion for the quarter, down from $4.31 billion in the second quarter last year. The revenue figure was lower than the $4.01 billion 15 analysts polled by Thomson Financial/First Call had projected.
The group earned $0.36 per share diluted, excluding one-time charges, up from $0.33 per share in the second quarter 2001. When including one-time charges, however, FON earned $0.12 per share for the quarter. Analysts had expected $0.33 per share in earnings.
The one-time charges included a $0.27 per share write-down due to investment losses, as well as a $0.03 per share gain from the sale of customer contracts, a company official said on a conference call Thursday.
The PCS Group, Sprint's wireless operations, tallied $3.02 billion in net revenue, up from $2.29 billion in the same quarter last year. That figure topped the $2.9 billion in revenue 30 analysts polled by Thomson Financial/First Call had expected.
The division's earnings translated to a loss of $0.17 per share, down from a loss of $0.26 per share in the second quarter 2001. Analysts, however, had expected that PCS would lose $0.07 per share.
Sprint blamed the larger-than-expected loss, in part, on a $61 million charge the group took based on uncertainty related to a U.S. Federal Communications Commission decision concerning whether wireless carriers can collect fees from wireline carriers that terminate long distance calls.
Despite the higher wireless revenue, the company saw a sharp drop-off in new wireless subscribers compared to the second quarter of 2001. New wireless customer gain was weak in the second quarter of 2002, with the PCS Group picking up a net of 308,000 new customers in the quarter, down from 843,000 customers in the same three months last year.
The company said it plans to roll out 3G (third generation) mobile phone service, which supports higher speeds and multimedia content, in the third quarter and that it expects that service to drive growth.
That service, and the new devices that will be rolled out at the same time, "will provide customers a compelling reason to choose Sprint," said Charles Levine, president of Sprint PCS on a conference call Thursday.
Customers have been delaying their purchases of new mobile phone handsets, waiting for 3G devices, he added. Business users, especially, are expected to be heavy 3G customers, he said.
The PCS Group (PCS) stock opened up $0.50, or 10 percent, at $5.50 Thursday. FON (FON) was unchanged in early morning trading, but closed down $0.54, or 4.41 percent, at $11.70 Wednesday.