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News > Technology
BellSouth warns on profits
November 17, 2000: 7:06 a.m. ET

High-speed Net access, Latin America expansion seen limiting 2001 growth
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NEW YORK (CNNfn) - BellSouth Corp. has cut its profit forecast for 2001, citing costs related to growth in its high-speed Internet access business and expansion plans in Latin America.

The regional telephone company also said Thursday it plans to restructure its consumer video entertainment business, which may result in an unspecified charge to earnings.

BellSouth, the dominant local telephone company in nine southeastern states from Kentucky to Florida, said it now expects earnings growth of 7 percent to 9 percent next year, well below its previous guidance of 13 percent to 15 percent.

graphicWall Street had been expecting Atlanta-based BellSouth to earn $2.22 a share in 2000 and $2.51 a share in 2001, according to First Call, which tracks analysts' forecasts. The company earned $2 a share in 1999, First Call said.

BellSouth's growth forecasts were released after the stock market closed Thursday. BellSouth (BLS: Research, Estimates) stock ended at $49.25, down 38 cents, Thursday, but the stock fell to $45 in before-hours trading Friday, according to the electronic trading service Instinet.

For 2001, BellSouth expects revenue to grow 7 to 9 percent, excluding revenue from its domestic wireless operations. Including its share of revenue from its Cingular Wireless joint venture, BellSouth said revenue will grow 9 percent to 11 percent.

BellSouth expects to triple its Digital Subscriber Line customer base to 600,000 in 2001 from 200,000 in 2000. DSL is a form of high-speed Internet access that works on traditional copper telephone lines rather than fiber-optic cables. 

Despite the rapid increase in DSL customer growth, BellSouth said it would not increase its capital spending plans. Instead, it will shift its spending toward its new, fast-growing businesses and away from slow-growing, traditional telephone services.

BellSouth also said Latin American wireless customers are expected to grow by 2 million, or 30 percent, in 2001, due to expansion in existing markets and acquisitions in Colombia. Earlier this year, the company set plans to launch a tracking stock for its international wireless business.

In a conference call with analysts and reporters, BellSouth Chief Financial Officer Ron Dykes said the company is examining all of its video transmission services. BellSouth in May forged a pact with GE Americom, owned by General Electric Co. (GE: Research, Estimates), to provide satellite television services to customers in its southeastern U.S. territory and beyond.

-- Reuters contributed to this story graphic





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