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SBC meets expectations but warns on 2001

Plagued by a sluggish economy, the company says earnings for the year should be between $2.35 to $2.40 per diluted share, well below analysts' expectations.

Telephone company SBC Communications matched already lowered expectations for its first quarter, but warned that the rest of 2001 would fall short of estimates.

SBC, plagued by a sluggish economy, said earnings for the full year should be between $2.35 to $2.40 per diluted share, before one-time charges. That's well below the $2.46 per share profit analysts were expecting, according to First Call.

"The economy is having a greater impact on our business than we projected," CEO Edward Whitacre Jr. said in a statement.

SBC, a Baby Bell that operates in the southwest and midwest, is the second largest local phone company in the United States.

SBC on Monday reported net income of $1.7 billion, or 51 cents per diluted share, for the first quarter, matching analysts' predictions. That's down from profits of 56 cents per share in the year-ago quarter and 57 cents per share in the fourth quarter of 2000.

SBC had trimmed earnings projections in March, saying higher expenses related to the acquisition of Sterling Commerce, DSL expansion and service upgrades would affect first-quarter results.

It wasn't alone; Sprint reported earlier this month that it would likely miss expectations for its second quarter and full year. But long-distance firm WorldCom, which reports results Thursday, saw its shares jump last month after reiterating earlier guidance.

SBC revenues for the first quarter, including results from its Cingular wireless division, were $13.1 billion, up 4.7 percent from a year ago.

SBC data revenues rose 39.9 percent from a year ago to $2.1 billion. That figure includes revenues from high-speed digital subscriber line Internet services, where the number of customers increased by 187,000 during the quarter.

Its Cingular wireless division gained 854,000 net subscribers during the quarter, bring the total subscriber base to 20.5 million. Cingular's wireless services revenues grew to $3.1 billion, up 14.8 percent from a year ago.

SBC's long distance business was expanded to include Kansas and Oklahoma during the quarter, and the company expects a decision soon from the Federal Communications Commission about offering service in Missouri. SBC also has applications pending with regulators for California, Nevada, and Arkansas.