Sprint Posts $519 Million Profit, Topping Expectations

Sprint FON, which includes the Overland Park, Kan., company's long-distance division, recorded earnings of $526 million, or 59 cents per share for the quarter that ended Sept. 30. That compares with earnings of $154 million, or 18 cents per share, for the same quarter a year ago.

Excluding one-time charges, including losses due to WorldCom's bankruptcy and savings from restructuring, the division made 44 cents per share, beating the 37 cents per share predicted by analysts surveyed by Thomson First Call.

The company's wireless business, Sprint PCS, lost $7 million, or 1 cent per share. Excluding one-time items _ WorldCom charges and income from the sale of a stake in Mexican wireless operator Pegaso _ PCS lost 13 cents per share. That was better than the 19-cent share loss analysts had expected. During the same period last year, PCS lost $288 million, or 29 cents per share.

Still, Sprint PCS reported a loss of 78,000 subscribers for the quarter, and customer additions were down compared to the same period last year.

The company said that its PCS and FON operations took a total of $36 million in charges from bad debt related to WorldCom's bankruptcy.

Sprint chairman and chief executive William T. Esrey said Sprint reduced its debt by $450 million in the quarter, leaving it with debts of $25.2 billion.

'I'm pleased with the progress we are making in both operating performance and management of the balance sheet,' Esrey said.

He also said Sprint expected to receive $2.2 billion next year from the sale of its profitable phone-directory business to R.H. Donnelley. A growing number of telecommunications companies have sold the directory businesses in recent months to ease investors' concerns about liquidity and to lower debt.

Independent telecom analyst Jeff Kagan called the better-than-expected earnings a 'temporary break' attributable to cost-cutting measures.

'Sprint's doing a great job of making lemonade out of lemons, I guess,' Kagan said. 'They're taking a situation and they're finding ways to cut costs and make the company profitable. But that can only go for so long.'

Before the earnings were announced, shares of Sprint PCS were up 8 cents to close at $2.38 Thursday on the New York Stock Exchange. In extended trading, shares rose another 37 cents.

Shares of Sprint FON closed at $10.67, up 27 cents. In after hours trading, the shares gained another $1.08.