SBC nudges past expectations
SBC Communications reports fourth quarter earnings that just beat Wall Street expectations, capping a year marked by new markets and megamergers.
Before one-time charges, the company posted earnings $1.1 billion, or 55 cents per share--representing 20 percent earnings growth from year-ago levels--on revenue of $7.9 billion. SBC earned 46 cents per share in the year-ago quarter.
Financial analysts had expected SBC to earn 54 cents a share, according to a consensus of analysts polled by First Call
"We had an exceptional year as we grew our businesses while taking steps to shape our future as an integrated, full-service global competitor that will continue to build value for our shareholders," said SBC chief executive Edward Whitacre.
SBC's sister Baby Bell Ameritech posted fourth quarter 1998 earnings of 61 cents a share, in line with a consensus of analysts' estimates according to First Call. The company earned 55 cents per share in the year-ago period.
Ameritech's final 1998 figures marked 12 percent earnings growth year-to-year. This was the sixth straight year of double-digit growth for the telco, but the numbers still came in substantially behind SBC's near-20 percent net growth.
SBC ended the year with 6 percent growth in its core wireline service, which contributed 56 percent of SBC's overall revenue growth during the fourth quarter. But company's growth was led by its data business, which jumped 27 percent to $620 million in total revenue over the last year. These figures tracked the first large-scale rollouts of DSL high-speed Internet services in the company's Pacific Bell territory in California.
SBC stock fell 0.11 percent to 58.44. Separately, the investment banking firm Legg Mason downgraded the company's outlook to "market perform" from "outperform." Shares have traded as high as 59.25 and as low as 35 in the past 52 weeks.
The company has spent much of the last six months in regulatory battles at the state and local level, defending its proposed merger with Ameritech. Consumer groups and rival companies have blasted the deal, saying it will concentrate too much telecommunications power into too few hands.
But the company also has been working to expand its data and wireless offerings. Last week it announced it would sharply cut prices for DSL (digital subscriber line) high-speed Internet access. The company also plans to speed up its rollout of DSL service in California, Connecticut, and its five-state Southwestern Bell territory.
Yesterday, the company said it would buy Comcast's cellular operations, allowing it to fill in several key gaps in its East Coast mobile phone business. SBC will pay $1.67 billion for Comcast's 800,000 subscriber cellular subsidiary, a price that analysts said was far below the premium paid by Vodafone for its pending merger with AirTouch Communications.