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Sprint posts fourth quarter profit

Sprint Corp. on Tuesday posted a consolidated profit amid weak long-distance telephone sales.

Sprint Corp. on Tuesday posted a consolidated profit amid weak long-distance telephone sales.

Sprint, the No. 4 U.S. long-distance telephone company, said its consolidated income for the fourth quarter was $38 million versus net income of $39 million for the same period last year.

Fourth quarter consolidated net operating revenues were $6.7 billion, compared to $6.5 billion in the same period last year. The consolidated results include Sprint’s FON Group, its main long-distance and local telephone and data operations, and PCS Group, its wireless telephone arm.

The FON Group posted net income of $360 million, or 40 cents a share, compared with $294 million, or 33 cents a share, a year ago. Excluding special items, FON Group's profit totaled 39 cents, up from 37 cents a year ago.

Wall Street analysts had expected FON Group to earn 37 cents a share, according to tracking firm Reuters Research, a unit of Reuters Group Plc.

Revenue for the FON Group dropped 3.6 percent to $3.54 billion, while sales in its core global markets group, which provides long-distance services, dropped 5.8 percent.

The PCS Group reported a loss from continuing operations of $322 million, or 31 cents per share, for the fourth quarter, compared to a loss of $255 million, or 25 cents a share, in the year-ago quarter.

Before one-time items, the wireless unit reported a loss of 10 cents a share, compared with a loss of 18 cents a share a year ago. Analysts had expected a loss of 12 cents a share.

Separately, Sprint said it plans to outsource some of its wireless customer care operations to International Business Machines Corp. and also forge a multi-year sales and marketing pact with the computer and services company, industry sources said on Monday.

Outsourcing part of its wireless support operations will cut costs as it tries to offset shrinking long distance revenues.

The wireless agreement will move 5,000 to 6,000 jobs, or about 8 percent of Sprint’s 68,000 workforce, to IBM, saving the company between $2 billion and $3 billion in costs over the course of the deal, according to a report in the Wall Street Journal. The report cited people familiar with the matter.

The marketing pact will allow it to sell its communications services to the large corporations IBM serves. Sprint is trying to bolster its presence in the large corporate market to better compete against larger rivals AT&T Corp.. and MCI.

Sprint is expected to formally announce the multi-year deal in a meeting with financial analysts on Wednesday. Sprint will report fourth quarter earnings on Tuesday.

REUTERS