U S West (NYSE: USW) topped consensus estimates Wednesday with fourth quarter earnings of $425 million, or 83 cents a share, on sales of $3.49 billion. First Call was expecting a profit of 78 cents a share.
The company, which reported revenue growth of 6.3 percent, said data and wireless products drove sales. U S West said 78 percent of its revenue growth came from wireless and data.
EBITDA (earnings before interest, taxes, depreciation, amortization and other) grew to $1.45 billion, up 5.3 percent from the fourth quarter of last year.
U S West was originally going to merge with Global Crossing (Nasdaq: GBLX), but the deal was scrapped when Qwest Communications (NYSE: Q) entered the fray with a better offer. As a result, U S West had to sell 24 million shares and lost $259 million, or 51 cents a share. Of the loss, 44 cents a share is related to depreciation of Global Crossing shares with the remainder attributed to other agreements between the companies.
U S West, which is merging with Qwest now, said its major initiative is transforming the company into a high-growth telecommunications concern.
"Exceeding our 1999 targets in the emerging data, Internet, wireless and even video growth areas of our business is a significant milestone for U S West,'' said Sol Trujillo, chairman, president and CEO of U S West, in a statement.
In the key areas, data revenue was up 36 percent to $486 million in the fourth quarter and wireless revenue was up 71 percent to $78 million. The company also said it had 35,000 subscribers for its video services.
U S West said it has nearly 960,000 "growth subscribers," which are defined as customers for the company's PCS, Digital Subscriber Line and Internet access service.
These growth plans, however, hit the bottom line. U S West said investment in new areas cut fourth quarter earnings by 27 cents a share. For the year, these growth areas cut 81 cents a share from the bottom line.
Among the company's traditional areas of local phone service, U S West said it had strong growth in caller ID, call waiting and voice messaging services.
For the year, U S West reported earnings of $3.23 a share on sales of $13.1 billion.