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Sprint&#039s core service offsets PCS losses in 2Q

Sprint Corp. (NYSE: FON), the No. 3 U.S. long distance telephone company, said Thursday its second-quarter profits rose to $386 million, or 44 cents a share, on par with First Call's expectations. Sprint said strong core long distance business offset a loss in international joint ventures and its high-speed data operations.

Shares in the Kansas City, Missouri-based company fell 1 11/16 to 51 1/2 in initial trading Thursday. Sprint PCS shares fell 1 to 57.

Net income was a 6 percent increase over the $364 million or 41 cents a share earned a year ago. Total revenues increased 8 percent to $4.24 billion from $3.95 billion a year ago. Long distance revenues increased 10 percent to $2.67 billion from $2.42 billion, as calling volumes rose 24 percent, the company said.

Sprint's "second quarter performance was marked by double-digit increases in our core business operating income, operating cash flow and earnings per share. It was a quarter of superior execution on all fronts of the business,'' said Sprint Chairman William Esrey in a company release.

In its local telecommunications business, revenue increased 5 percent to $1.38 billion from $1.32 billion. Telephone access lines increased 5.3 percent to 7.9 million.

Shares of Sprint PCS, which trade separately to reflect the company's wireless operations, posted a smaller-than-expected loss of $1.25 a share. Analysts had expected a loss of $1.28 a share.

"Sprint PCS continues to lead the wireless industry with record subscriber growth for three consecutive quarters...Sprint PCS increased average revenue per customer while it reduced acquisition and operating costs-per-customer compared to the previous quarter,'' Esrey said. Sprint's wireless operation, Sprint PCS, added 617,000 new customers in the second quarter, bringing its customer total to almost four million.

Losses from Sprint's bleeding edge technology, the Integrated On-Demand Network (ION), which facilitates calls, faxes and Internet access via one phone line, were 5 cents per share for the quarter, compared with a loss of two cents per share in the second quarter of 1998.

Sprint also felt second quarter losses from Sprint's Global One international joint ventures with Deutsche Telekom AG (NYSE:DT) and France Telecom (NYSE:FTE). Losses were seven cents per share, compared with six cents per share in the second quarter of 1998.

Sprint also beatestimates for the first quarter. Six of 17 analysts covering the stock rate it a "strong buy" according to Zach's Investment Research.