BellSouth earnings miss mark by a penny

BellSouth’s normalized results missed Wall Street expectations by one penny for the second quarter of 2001.

Taking into account the formation of Cingular Wireless and other one-time items, the RBOC posted a normalized diluted earnings per share (EPS) loss of 52 cents, one cent lower than the consensus analyst estimate taken from First Call/Thomson Financial. Normalized operating revenues for the quarter were $7.4 billion, while normalized net income for the quarter was $973 million, down 8.6% year-over-year.

Reported EPS was 47 cents, while reported net income was down more than 17% to $880 million.

Normalized operating revenues for the company’s communications group was up to $4.74 billion from $4.57 billion year-over-year. Domestic wireless revenues grew 36% to $1.41 billion from $1.03 billion.

Driving down the company’s results for the quarter was a 5-cent EPS hit due to foreign currency losses associated with the recalculation of U.S. dollar-denominated debt. The company’s build-out of DSL infrastructure and entry into Columbia also lowered EPS by 2 cents each.

In addition to the lower-than-expected earnings, the company announced lower earnings guidance for the remainder of 2001 due to the slowing economy and foreign exchange losses associated with U.S. dollar-denominated debt. The company now expects 2001 EPS, adjusted for year-over-year foreign exchange losses, to fall between $2.30 and $2.35. Including the effects of these losses, normalized EPS is expected to be between $2.25 and $2.30. Previously the company had predicted normalized EPS of $2.35 to $2.40.

According to Ron Dykes, BellSouth’s chief financial officer, the slowdown in the U.S is the cause of the company’s lowered guidance. “That impact permeates all facets of our results. The slowing economy has reduced the growth of the voice market in the Southeast. Sales to biz customers have been impacted more by the economy than those to consumers,” he said.