SBC said it expects to earn US$0.50 to US$0.53 a share in this quarter, compared with the average estimate of US$0.59 from analysts surveyed by First Call/Thomson Financial.
It's the first time the company has forecast earnings for the quarter, spokesman Larry Solomon said. SBC had profit from operations of US$1.91 billion, or US$0.56 a share, a year earlier.
SBC's profit will be hurt by investments aimed at offsetting sluggish growth in its phone business. Earnings would have been 10 cents a share higher without expenses related to its March 2000 purchase of e-commerce software and service provider Sterling Commerce Inc and investments in high-speed Internet access and long-distance phone service.
"Building out wireless and DSL is absolutely the right thing to do, but the fact is, build-out leads to expenses," said Andrew Hamerling, an analyst at Banc of America Securities, who rates SBC shares a "buy."
SBC should be able to make up the first-quarter shortfall in the rest of the year, said Daniel Reingold, an analyst at Credit Suisse First Boston who has a "buy" rating on SBC shares.
Spending for the Cingular Wireless venture with BellSouth Corp and to add employees and improve service at the Ameritech unit also will hurt first-quarter profit, the company said.
The San Antonio-based company cut its profit forecast for this year in December, citing delays in winning regulatory approval to sell long-distance service in California and a need to improve service at Ameritech.
In its statement yesterday, the company said per-share earnings growth in 2001 will be 11 percent to 14 percent. Sales, including proportionate results from Cingular Wireless, are still expected to rise 8 percent to 9 percent this year. Earnings in the second, third and fourth quarters will be more than US$0.60 a share, the company said.
Analysts polled by First Call expected SBC to earn US$0.62 a share in the second quarter, US$0.64 in the third quarter and US$0.69 in the fourth quarter.
SBC shares today fell US$2.20, or 4.6 percent, to US$45.50. The news was released after the close of regular US trading. The stock fell to US$43 in after-hours trading.
The company had 2 million long-distance customers in Texas in February, Solomon said. It started selling the service there in July.
Play video
There are currently no comments for this post.