SBC Communications Inc., the No. 2 local telephone company, on Wednesday said first-quarter earnings fell as declines in traditional phone service hurt profit margins.
SBC said the continuing loss of local telephone lines and spending on new products were somewhat offset by strong growth in high-speed Internet access, long-distance service and corporate data sales.
SBC and other “Baby Bells” have expanded into wireless phones and high-speed Internet service as their traditional local phone business has come under siege from new competitors and cellular phones.
SBC said net income for the first quarter was $1.9 billion, or 59 cents per share, compared with $2.5 billion, or 74 cents a share, a year earlier.
Excluding one-time gains and accounting changes, SBC said it earned 37 cents a share in the first quarter, compared with 42 cents a share a year earlier. Analysts had expected 32 cents a share, according to Reuters Research.
Revenue fell 2.4 percent to $10.1 billion, and operating profit margin fell to 15.5 percent from 18.3 percent. SBC said about 305,000 consumer local lines were lost in the quarter, while it added 466,000 high-speed Internet lines and 2.6 million long-distance lines.
The company expects its operating income margin for all of 2004 to range between 14.5 percent and 15.5 percent, with some quarter-to-quarter variation. SBC Communications Inc., the No. 2 U.S. local telephone company, on Wednesday said quarterly earnings fell from a year earlier, when results were boosted by one-time items.
Net income for the first quarter was $1.9 billion, or 59 cents per share, compared with $2.5 billion, or 74 cents a share, a year ago.