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Sprint beats 1Q estimates

3 min read

Sprint (NYSE: FON) beat estimates in its first-quarter report Tuesday, as profits rose 2.5 percent on strength in its core telephone operations, which offset costs in building its data network. The company also reported a narrower than expected loss in its wireless unit.

Shares the long-distance telephone company, which is set to be acquired by rival MCI WorldCom Inc. (Nasdaq: WCOM), closed at 56 3/4 Monday. Shares in its wireless tracking unit, Sprint PCS (NYSE: PCS) closed at 46 3/4. The company also beat estimates in its fourth quarter.

Sprint's core results, which reflect long distance, local telephone and data operations show earnings from continuing operations of $445 million, or 48 cents a share, excluding a gain, compared with $434 million or 49 cents a share, in the previous year. The results topped First Call's consensus estimate of 47 cents a share.

Net income was $1.12 billion, including a gain on the sale of its stake in international venture Global One, compared with $406 million a year ago. The year-ago results included a $28 million loss from Sprint's interest in Global One's losses.

Sprint's first-quarter operating revenue increased 7 percent to $4.4 billion. Revenue for Sprint PCS, Sprint's wireless telephone business, jumped 95 percent to $1.2 billion.

Sprint's consolidated net operating revenue for the quarter was $5.48 billion, an 18 percent increase from $4.65 billion in the first quarter of 1999.

  • In its PCS unit, Sprint reported loss from continuing operations of 54 cents per share, narrower than First Call's prediction of 58 cents a share, and a big improvement over the 71 cents a share lost in last year's first quarter.

    The PCS unit also reported it added 831,000 new customers in the first quarter, the equivalent of one every 10 seconds. This brings it to 6.5 million customers nationwide, and coverage of more than 70 percent of the U.S. population.

    Total service revenue reached $1 billion in the quarter -- while operating cash flow losses narrowed to $181 million for the quarter. The PCS unit also reported average monthly revenue per user was slightly over $54 -- about 30 percent higher than the industry average.

    Capital expenditures were $693 million for the quarter, reflecting the expansion of Sprint's wireless network.

    Highlights for the quarter includes Sprint PCS Wireless Web's expansion of service offerings through partnerships with AOL (NYSE: AOL), EarthLink (Nasdaq: ELNK) and Go2 Systems.

  • For its FON group alone, Sprint reported revenue of $4.40 billion, up 7 percent over the previous year's first quarter. Excluding a one-time 2-cent gain, diluted earnings per share from core operations increased 18 percent to 65 cents per share in the first quarter compared to 55 cents per share a year ago.

    Operating income from core operations rose 14 percent to $907 million, and operating cash flows from core operations were $1.42 billion, up 10 percent from the first quarter a year ago.

    Net income was $1.12 billion in the quarter, compared with $406 million for the same period a year ago. Net income for the quarter included a $675 million, or 75 cents per share, after-tax gain on the sale of Sprint's investment in Global One.

    The company said residential long-distance revenues declined during the quarter due to reduced international revenues and the one-time loss of a calling card contract.

    Sprint's competitors include AT&T (NYSE: T) and GTE (NYSE: GTE).

    Sprint tops 4Q estimates, PCS unit adds 1M subscribers in quarter
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