Sprint ratchets down expectations—again

(Telephony) For the third time this year, Sprint lowered earnings projections for the full year. Sprint said 2001 earnings would be in the range of $1.13 to $1.18 per share, down from the previously revised estimate of $1.29 per share. Second quarter earnings were lowered to a range of 28¢ to 30¢ per share, down from 32¢ per share.

Sprint said second quarter revenues would be on par with the year-ago period, about $4.4 billion, and that full-year revenues would grow at a “low single-digit rate.” The carrier also cut its capital spending plan by $300 million to $5.9 billion, and said it would continue to assess capital expenditures to keep them in line with growth.

Sprint attributed the falloff to reduced demand for its wholesale long distance business and higher debt expense caused by bankruptcies by wholesale customers. In addition, “the profit contribution from the recently launched Web hosting and related professional services business is expected to increase at a slower pace than previously expected,” said a statement released by the company.

Sprint shares were downgraded by Merrill Lynch, but Dan Reingold, an analyst with Credit Suisse First Boston, reiterated his buy rating on Sprint FON shares based on his “continued belief that FON is an attractive acquisition candidate especially to those that could synergize with FON’s [long distance] and local operations and deem ION unnecessary or redundant.”

In an unrelated announcement, France Telecom and Deutsche Telekom announced the sale of their 152 million common shares of Sprint, which represent a 20% holding in the company. Sprint shares were off 3% in late afternoon trading.