SBC plans job cuts, reports lower earnings for third quarter
Monday, October 22nd 2001, 12:00 am
By: News On 6
SAN ANTONIO (AP) _ Regional phone service provider SBC Communications Inc. said Monday it would cut several thousand jobs and slash other costs because of a slow economy and regulatory setbacks that will make it difficult to increase earnings next year.
SBC made the announcement as it reported its third-quarter net income was $2.07 billion, or 61 cents per share, a 31 percent decline from $3 billion, or 88 cents per share a year earlier.
Excluding one-time items, it earned $2 billion, or 59 cents per share. That fell a penny short of the 60 cents expectation of analysts surveyed by Thomson Financial/First Call.
In early trading on the New York Stock Exchange, SBC shares were down 3.5 percent, or $1.54 a share, at $42.10.
Sales, including revenues from its Cingular Wireless joint venture, rose less than 1 percent from $13.42 billion to $13.52 billion.
Chairman and chief executive Edward Whitacre Jr. said SBC had to cut costs because a tough economy that it expects to last through next year, limiting business and consumer demand, and due to an uncertain regulatory environment.
Despite a 1996 law intended to reduce regulation in the telecommunications industry, SBC is more heavily regulated than ever, Whitacre said.
He said rules governing high-speed Internet service have added hundreds of millions of dollars in costs and will force SBC to delay expansion of its system, called Project Pronto.
``When you have to give your service away on DSL, that doesn't make much sense,'' Whitacre said. ``The regulators are expecting more and more out of us, and I don't think that's right, I don't think that's justified.''
Federal and state regulators have also slowed SBC's plans to expand its long-distance service into California and other states.
Whitacre said the economic and regulatory trends would limit SBC's ability to grow next year, but he declined to answer when analysts pressed him for details or an estimate of the impact on earnings.
The company will cut capital spending by about 20 percent next year, Whitacre added.
For the first nine months of the year, SBC said net income was $6 billion, or $1.77 a share, down 10 percent from $6.67 billion, or $1.95 a share, a year earlier. Sales fell 13 percent from $39.17 billion to $34.01 billion.
SBC provides local phone service throughout much of the Southwest and Midwest.
It also offers long-distance phone service to 4.6 million lines in Texas, Oklahoma, Kansas and Connecticut.