Sprint posts small net profit, exceeds expectations

Tuesday, July 29, 2003 | 11:21 a.m.

SUN STAFF AND WIRE REPORTS

KANSAS CITY, Mo. -- Despite a 3 percent fall in revenue, phone giant Sprint Corp. posted a second-quarter profit of $7 million Monday and said it's cutting its capital spending budget in Las Vegas and other markets.

Sprint's profit came after a loss of $68 million in the same quarter a year ago. The company's revenue fell to $6.5 billion from $6.7 billion, reflecting the ongoing turmoil facing Overland Park, Kan.-based Sprint and many of its rivals in telecommunications.

In fact, Sprint -- the main local phone company in Las Vegas -- said its landline unit will spend about $200 million less on capital expenditures this year than previously forecast.

About $30 million of that reduction will come in Nevada, said Detra Page, a Las Vegas spokeswoman for Sprint.

She said Sprint's 2003 capital budget for Nevada had been estimated at about $150 million. It has now been reduced to about $120 million.

Sprint spent $128 million on capital expenditures in Nevada during 2002, Page said.

The savings is a product of reduced demand for second phone lines with the emergence of broadband data service. Sprint also blamed falling demand on increased competition, including the use of cell phones as an alternative to landlines.

In recent legislative hearings, Sprint also said it had lost about 40 percent of its Las Vegas business market to rival carriers.

"We are continuing to invest to make sure the system here is state of the art," Page said.

Still, Sprint's landline and wireless divisions, which have separately traded stocks on Wall Street, each beat the forecast of analysts surveyed by Thomson First Call.

The long-distance unit reported earnings of $99 million, or 11 cents per share, during the three months ending June 30. Those figures were down from a profit of $102 million, 12 cents per share, during the second quarter of 2002.

The division reported that its revenue dropped about 8 percent, to $3.53 billion, compared with $3.84 billion during the first quarter of 2002.

When one-time events were excluded, including the $2 billion sale of the company's directory publishing company, the long-distance unit posted earnings per share of 35 cents. Analysts had been expecting 33 cents per share.

Officials said the long-distance division faces increased pressure from wireless technologies, with consumers increasing the number of minutes they use and, to a lesser extent, dropping access lines. The company saw its number of access lines drop by about 84,000 over the quarter, to fewer than 8 million.

Sprint's PCS wireless division lost $92 million, 9 cents per share, an improvement over a loss of $170 million, 17 cents per share, in the same period last year. Revenue also improved, rising 2.6 percent to $3.1 billion from $3.0 billion a year ago.

Analysts had been expecting Sprint PCS to lose 11 cents a share.