Sprint Corp. (www.sprint.com) announced its FON and PCS groups beat analyst estimates.
The Sprint FON Group reported diluted earnings per share of 32 cents in the first quarter, compared to 36 cents a year ago and the mean analyst estimate of 30 cents per share.
The group is comprised of the company’s Global Markets Division, Local Telecommunications Division and product distribution and directory publishing businesses.
Sprint FON reported net operating revenues of $4.03 billion, compared to $4.36 billion a year ago, and earnings before interest, taxes, depreciation and amortization (EBITDA) of $1.11 billion, down from $1.12 billion in the first quarter a year ago. Capital expenditures totaled $543 million.
Some analysts said the company’s FON earnings demonstrated solid performance in a difficult market and noted that the global long distance telecom market may be showing early signs of improvement.
“Declines in voice and data revenues and the hemorrhaging in global markets margins appear to have passed their peak,” said Lehman Brothers (www.lehman.com) analyst Blake Bath Tuesday in an equity research report. “However the outlook remains challenging for FON given the lagging impact of economic recovery on the telecom sector coupled with Sprint’s heavy long distance voice weighting (which saw consumer long distance voice decline 17 percent) and a total data/IP unit that is growing below industry pace.”
A Merrill Lynch (www.ml.com) report made similar observations about the global long distance market. According to the report, Sprint management has cited “some stabilization in point of sale voice pricing,” a slower rate of decline on data pricing, and some increases in frame relay “from a competitor that Sprint was endeavoring to follow.”
Sprint PCS reported a first quarter loss per share of 15 cents, compared to a loss of 40 cents a year ago and a mean analyst estimate of a 20-cents loss per share. The company added 725,000 net subscribers, boosting its customer base to nearly $14.3 million. Sprint PCS also reduced churn to three percent.
The wireless carrier reported net operating revenues of $2.85 billion, compared to $2.03 billion a year ago, and EBITDA of $640 million, up from $253 million a year ago. CAPEX was $603 million, reflecting capacity expansion, increased coverage of the nationwide wireless network and development of third generation capabilities.
Sprint PCS, the first major wireless carrier to report first quarter results, may serve as a bellwether for the sector. “As for the industry overall we do believe monthly sales are picking up from wireless and full year growth should be stronger than the consensus …” JP Morgan (www.jpmorgan.com) analysts said in an equity report Tuesday.
