BellSouth income down 29%

BellSouth saw its normalized earnings for the fourth quarter beat analyst estimates but the company’s reported net income dropped more than 29% because of charges for restructuring and write downs.

For the quarter ending Dec. 31, BellSouth posted operating revenues of $7.6 billion, up 4.5% year-over-year. The company’s normalized net income--excluding items such as foreign-currency exchange losses, investment write-downs, restructuring charges and the formation of Cingular Wireless, the company’s joint venture with SBC--was about $1.2 billion, up about 6.6%. But BellSouth’s reported net income, which includes these items, decreased 29.1%, to $792 million from $1.1 billion. Normalized earnings per share for the quarter was 63 cents, beating the analyst consensus of 60 cents, while reported EPS was 42 cents

The pattern is similar for the company’s full-year results. Operating revenues were $29.6 billion, up from $27.5 billion. BellSouth’s normalized net income for 2001 was $4.4 billion, up 4.2%, while reported net income was $2.6 billion, down more than 39% from year 2000 results. Normalized EPS for 2001 was $2.34 per share compared to $2.24 in 2000. Reported net income dropped to $1.36 from $2.23.

Continuing a disturbing trend for Bell companies, BellSouth’s number of access lines served dropped for the quarter, compared to the same period last year. The company’s total number of access lines in service fell almost 2% to 25.4 million. According to Ron Dykes, BellSouth’s chief financial officer, the company’s revenue mix is moving away from local service to higher-growth sectors.

“By the end of ’02, we expect half of our revenues will be generated by data, broadband, wireless and long-distance services,” he said. “Local voice will represent only 43% of revenues.”

BellSouth’s data and broadband business exhibited strong growth for the quarter and the full year. Data revenues were $1.2 billion for the quarter,, up from $956 million year-over-year. For full year 2001, the company’s data revenues reached $4.5 billion.

The company also exhibited strong DSL subscriber growth, finishing the year with 620,500 retail and wholesale DSL customers. DSL revenues were $254 million for 2001, up from just $53 million in 2000.

BellSouth’s domestic wireless revenues, representing the company’s 40% share in Cingular Wireless, were $1.5 billion--an increase of 18.8% when compared to the same quarter a year ago. But the company’s 325,000 subscriber adds were significantly lower than the 700,000 some analysts were expecting.