SBC Communications Reports Lower 2Q Earnings

The earnings come to 55 cents per share, down from $2.07 billion, or 61 cents per share, in the second quarter of 2001. Analysts' consensus for the latest quarter was 59 cents, according to Thomson First Call.

SBC, the nation's second-largest local phone company, had revenue in the three months ended June 30 totaling $13.1 billion, down from $13.6 billion in the same period last year.

SBC management said the quarterly earnings were lowered by $84 million in additional reserves required by WorldCom's bankruptcy filing this week. WorldCom owes tens of millions of dollars to SBC and other local phone companies for leasing phone lines to carry it long-distance traffic.

The company also took an after-tax charge of $220 million to pay for severance packages and other costs associated with its job-reduction efforts. SBC announced in May that it would cut 5,000 positions in the second quarter, raising the total to 15,000 since last fall.

Edward Whitacre, SBC chairman and chief executive, said Tuesday that the company's performance in a tough telecom environment bodes well for the future.

"Our ability to effectively manage this business in this difficult market will leave us well-positioned to capitalize on opportunities when external conditions improve," he said.

When those conditions will improve remains unclear. SBC said it expects its prospects to be hampered by both a shaky economy and continuing competitive pressures in the telecom sector.

The company reported that it increased its number of broadband subscribers by about 14 percent in the quarter and its Cingular Wireless partnership with BellSouth boosted its subscriber count by about 4.5 percent.

For the first six months of 2002, SBC had income of $1.75 billion, or 52 cents per share, on sales of $21.4 billion. That compares to income of $3.93 billion, or $1.15 per share, on sales of $22.7 billion in the first half of 2001.

The company posted a net loss of more than $80 million in the first quarter of 2002, mostly due to $1.8 billion charge relating to a lower valuation of Internet subsidiary Sterling Commerce.

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