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SBC gets boost from DSL, wireless

The telephone carrier reports solid second-quarter results thanks to strong growth in its wireless and DSL businesses, and its earnings may top estimates for the year.

SBC Communications reported solid second-quarter results Wednesday thanks to strong growth in its wireless and DSL businesses. Management also said earnings might top estimates for the year.

Earnings were $2.1 billion, or 61 cents a share, topping First Call's prediction for earnings of 57 cents a share, and last year's second-quarter earnings of 56 cents a share.

Revenue grew 3 percent to $13.6 billion over last year, including results from Cingular Wireless, a wireless joint venture with BellSouth, of which SBC owns 60 percent. Cingular started operations in October 2000.

SBC added in a statement that the modest amount of revenue growth in the second quarter is an effect of the weak U.S. economy and increased competition. The company also said it benefited from the sale of nonstrategic assets, including a security-monitoring business.

The company's strong suit was its digital subscriber line business. SBC saw 28 percent growth in its data revenue to $2.2 billion and reported more than 1 million customers in service at the end of the quarter. That puts the company well ahead of its competition.

For the June quarter, EarthLink reported 346,000 broadband subscribers, the majority of which are DSL subscribers, and Qwest Communications International reported 360,000 DSL customers. Verizon Communications, also a major DSL player, reports earnings July 31. Though DSL has been a fast-growing area, subscriber growth has slowed during the downturn.

SBC said other highlights for the quarter included revenue growth of 13.6 percent to $3.6 billion at Cingular. Cingular also added 701,000 new customers, bringing its total to 21.2 million. In SBC's long-distance business, there was a 27 percent increase in lines since the beginning of the year.

The company also said its earnings would be slightly above expectations for the year. Management expects full-year earnings before one-time items to be $2.35 a share to $2.40 a share. First Call's consensus estimate is for $2.33 a share. SBC also said it expects third- and fourth-quarter revenue growth to be "modest."

Net income for the second quarter counted one-time items, including a gain of $189 million related to a voluntary retirement program and a loss of $261 million related to investments.