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Telecoms post upbeat 3Q
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October 27, 1999: 11:22 a.m. ET
SBC tops estimates, Qwest meets forecasts, Global Crossing trims losses
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NEW YORK (CNNfn) - A Baby Bell that's the newest member of the Dow Jones industrial average and two upstart long-distance companies posted third-quarter results Wednesday that met or surpassed forecasts, powered by explosive gains in demand for data and Internet services.
SBC Communications Inc., reporting on its last independent quarter before this month's $61 billion merger with Ameritech, said operating profit jumped 22 percent. Meanwhile Qwest Communications Inc. operated in the black while Global Crossing said its losses shrank.
The companies are among those jockeying for position in a hot market, with demand for Internet, data, global and wireless service soaring. And they are among those feeding the consolidation frenzy in the telecommunications sector: Global Crossing merged with the long-distance provider Frontier, and Qwest is set to merge with regional Bell US West.
SBC tops 3Q target
SBC Communications Inc., the nation's largest regional Bell, rode rising demand for wireless and data services to net income of $1.3 billion, or 64 cents per diluted share, up from earnings before one-time items of $1.0 billion, or 53 cents a share, in the same quarter last year.
Wall Street analysts expected San Antonio-based SBC to post income of 61 cents a share, according to First Call Corp., a research firm.
The 1998 third-quarter results excluded a one-time gain of $219 million, or 11 cents a share, from the sale of a non-core business. With that gain, net income in the year-earlier quarter was $1.3 billion, or 64 cents a share.
Operating revenue rose 7.6 percent to $7.7 billion.
SBC said revenue in data services jumped 43.4 percent to $1.5 billion, and its wireless subscriber revenue rose 25 percent.
For the first nine months of the year, SBC said net income, including the accounting change, was $3.6 billion, or $1.79 per share, up from $3.3 billion, or $1.65 per share, in the same period a year earlier. Revenue from operations rose 6.5 percent to $22.5 billion.
SBC also posted pro forma results to show how it would have performed as a combined company with Ameritech. That deal closed Oct. 8.
For the quarter, combining Ameritech's results, SBC reported pro forma income excluding one-time items of $2.0 billion, or 57 cents per share, up from a pro forma $1.7 billion, or 49 cents a share, a year earlier.
The results exclude a one-time charge of $930 million, or 26 cents a share, tied mainly to changes in accounting for Ameritech's security business.
Including that charge, SBC said pro forma net income fell 41 percent to $1.1 billion, or 33 cents per share, from $1.9 billion, or 56 cents a share, a year earlier.
Shares of SBC (SBC), which will join the Dow Jones industrial average next Monday, rose 1-5/16 to 45-9/16 Tuesday.
Qwest matches estimates
Qwest Communications International Inc., of Denver, posted third-quarter operating profit that matched analysts' forecasts, buoyed in part by its 200 percent gain in Net and data services revenue.
The No. 4 U.S. long-distance carrier earned $19.8 million, or 3 cents per diluted share, excluding $25 million in one-time costs connected with its planned $35 billion merger with US West (USW). That met the First Call consensus estimate.
The company lost $11.4 million, or 2 cents per share, in the year-earlier period on a pro forma basis, which excludes merger-related costs but assumes that certain acquisitions had been included from Jan. 1, 1998.
But including the merger costs, Qwest reported a net loss of $1.8 million, or break-even per share, for the latest quarter. That was an improvement from a net loss of $6.9 million, or 1 cent a share, a year earlier.
Revenue rose 26 percent to $1.02 billion.
For the first nine months of 1999, net income including special charges was $21.5 million, or 3 cents a diluted share, compared with a net loss of $822.6 million, or $1.58 a share, in the 1998 period. Revenue doubled to $2.77 billion.
The 1998 period includes merger-related charges associated with Qwest's buyouts of LCI and EUnet.
Shares of Qwest (QWST) rose 1/16 to 34-1/2 early Wednesday.
Global Crossing falls into the red
Buyout-hungry Global Crossing Inc. went into the red, but posted a narrower-than-expected loss in its third quarter, as the undersea fiber-optic cable layer continued to add customers for its telecom service.
On a pro forma basis, taking into account its merger with Frontier and its purchase of Marine Global Systems, Global Crossing posted a loss of $34.1 million, or 4 cents per share, before one-time items, down from a profit of 11.7 million, or 2 cents per share, a year ago.
The First Call consensus estimate was for Global Crossing to report a loss of 10 cents per share.
Pro forma revenue, including the merged companies, rose to $929 million from $863 million.
For the first nine months of the year, Global Crossing posted a pro forma loss of $55.4 million, or 7 cents a diluted share, versus a loss of $49.4 million, or 7 cents a share, a year earlier. Revenue rose to $2.8 billion from $2.4 billion.
Shares of Global Crossing (GBLX) added 3/4 to 34-7/8.
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