Originally created 07/23/02

BellSouth shares sink on poor profits



ATLANTA - Shares of BellSouth Corp. skidded to a four-year low Monday after the regional phone provider posted disappointing second-quarter earnings and said it sees no relief for the struggling telecommunications sector.

For the April-June quarter, BellSouth earned $293 million, or 16 cents a share, on revenue of $7.24 billion. In the year-ago period, it earned $880 million, or 47 cents a share, on revenue of $7.35 billion.

Excluding one-time charges, BellSouth earned $996 million, or 53 cents per share. Analysts surveyed by Thomson Financial/First Call had expected 57 cents.

Investors responded by dumping BellSouth shares. The stock sank more than 18 percent, down $5 to $22.61 - its lowest closing level since early 1998 - in late trading on the New York Stock Exchange.

Executives for the company, which employs 500 people in the Augusta region, said they did not know when business spending would pick up.

"I don't think technology companies or services have any visibility as to when the upturn will take place," said F. Drake Johnstone, an analyst for Davenport & Co. "I would describe it as a sectorwide phenomenon."

Other Baby Bells followed BellSouth's lead. Qwest, Verizon and SBC all were down more than 7 percent.

BellSouth, the nation's No. 3 regional phone provider, cut its full-year earnings forecast to $2.13 to $2.20 per share. Analysts had been expecting $2.34 per share.

In addition to the weak U.S. market, the company said it was hurt by Central and South America, home to 11.2 million of its 44 million customers. Currency devaluations in Argentina and Venezuela were a drag on revenue.

The quarterly results included charges of 7 cents per share for foreign currency transaction losses, 19 cents for losses on equity investments and 12 cents for the 5,000 job cuts BellSouth announced during the quarter.

The quarter included the launch of BellSouth long-distance service in Georgia and Louisiana, where 147,000 customers signed up in five weeks. BellSouth is seeking approval to offer long-distance in five other states.

Cingular Wireless, BellSouth's joint venture with SBC, provided a bright spot. BellSouth said it added 353,000 subscribers in the second quarter, well above Wall Street expectations.



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