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BellSouth's Net Falls 55%, Hurricane Damage Weighs
A WALL STREET JOURNAL ONLINE NEWS ROUNDUP
Wednesday, January 25, 2006

BellSouth Corp.'s said its fourth-quarter profit dropped 55% on a slight increase in revenue and heavy hurricane-related costs.

The Atlanta-based regional phone provider reported fourth-quarter net income of $618 million, or 34 cents a share, down from $1.36 billion, or 74 cents a share, a year ago.  The figures do not include its part ownership of Cingular Wireless.

Excluding one-time items, BellSouth said it earned $965 million, or 53 cents a share.  On that basis, analysts surveyed by Thomson First Call were expecting earnings of 45 cents a share.

Revenue rose 1.9% to $5.24 billion in the quarter from $5.15 billion a year earlier.  Including contributions from Cingular, revenue increased 9.2% to $8.66 billion from $7.93 billion, beating Wall Street's projection of $8.58 billion.

BellSouth said hurricane-related expenses in the fourth quarter reduced its results by 8 cents a share.  The fourth-quarter results were also weighed down by the company's accounting for wireless merger amortization, which involves Cingular.

Revenue in the fourth quarter was reduced by $48 million due to Hurricane Katrina-related billing credits, and the company estimated that 60,000 access lines were disconnected in the affected area.  BellSouth had estimated in September that the future cost to restore its network would be about $400 million to $600 million.  The company said Wednesday that it now expects the cost to total $700 million to $900 million.  It only expects about $250 million of that cost to be covered by insurance.

BellSouth added 204,000 net DSL customers in the fourth quarter, but it lost 409,000 access lines in the quarter to drop its total at the end of the year to 20 million.  It said part of the loss was due to the hurricane, but was primarily driven by more people using cell phones to make calls instead of landline telephones.  It also cited competition from cable providers.

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