Sprint stock holding up despite new profit warning

Wednesday, May 16, 2001 | 11:01 a.m.

SUN STAFF AND WIRE REPORTS

KANSAS CITY, Mo. -- Sprint Corp. on Tuesday lowered its second-quarter and full-year performance expectations for its main FON Group because of rising debts from wholesale customers declaring bankruptcy.

The company said it still expects total revenues for the FON Group in the second quarter to be similar to the year-ago period. It also expects revenue for the year to grow at a very low, single digit rate as it faces tough competition for long distance customers.

Sprint lowered second-quarter earnings per share estimates to between 28 cents and 30 cents. Analysts surveyed by Thomson Financial/First Call had expected earnings of 32 cents.

Sprint also lowered its full-year earnings per share expectations to $1.13 and $1.18, down from the first quarter estimates of $1.31 and $1.39, said spokesman Mark Bonavia.

Sprint said its operating cash flow is below the company's previous outlook. As a result, Sprint expects the full year FON Group earnings before interest and taxes to be in the range of $4.3 billion to $4.4 billion.

Sprint said it plans to trim capital spending this year to $5.9 billion from earlier guidance of $6.2 billion.

Shares of FON closed down 6 cents to $21.58 in trading on the New York Stock Exchange Tuesday. The stock was down another 53 cents this morning -- a decline of just 2.5 percent.

Sprint, the dominant local phone company in Las Vegas, today was downgraded to near-term neutral from near-term accumulate by analyst Adam Quinton at Merrill Lynch.

But analyst Simon Flannery at Morgan Stanley Dean Witter reittered an outperform rating on the stock with a target price of $29 per share.

Besides the FON Group, Sprint runs a big wireless cell phone operation -- Sprint PCS -- in Las Vegas and other cities.