BellSouth's Sales And Profits PlummetBellSouth's Sales And Profits Plummet

ATLANTA (AP)--BellSouth Corp. reported a nearly 25% drop in fourth-quarter profits Thursday, as sales slipped 8% and the telephone service provider continued to lose customers. The results fell short of Wall Street expectations.

For the quarter ended Dec. 31, the dominant local phone provider in the South earned $597 million, or 32 cents a share, compared with a profit of $792 million, or 42 cents a share, a year earlier.

Revenue fell 8 percent to $5.69 billion, compared to $6.21 billion in the same three-month period a year ago.

Excluding one-time items, the company said it earned $936 million, or 50 cents a share, in the quarter. On that basis, Wall Street analysts surveyed by Thomson First Call predicted a profit of 51 cents per share.

BellSouth had 24.6 million landline telephone customers in the United States at the end of 2002, compared to 25.4 million a year ago, a 3% erosion. Spokesman Jeff Battcher blamed competition for local phone service, primarily among business customers, from AT&T and other companies that have traditionally offered long-distance service.

In addition to weak demand for phone services, the company said currency devaluations in Argentina and Venezuela weighed on its results.

In a conference call with investors Thursday, chief financial officer Ron Dykes said, "Obviously we're not pleased about the results for the fourth quarter or the year. I believe '03 will be a better year than '02."

Still, he said total revenues in 2003 are expected to decline in the low single-digit percentage range; he declined to give specifics on profits. He said capital investment will be about 15 percent of revenue, down from 16 percent last year.

BellSouth said it has almost completed a work force reduction of 5,000 employees that it announced last May. It said it took charges for the reduction and for the sale of BellSouth's remaining Brazilian yellow pages operation.

The company also said that this year its net income will be reduced by about $90 million, or 5 cents a share, because of its previously announced decision to expense stock options.

BellSouth has been touting long-distance service as a way to increase its bottom line in future quarters.

Last month, the Federal Communications Commission cleared the way for BellSouth to be the first regional provider of local phone service to be allowed to offer long distance service throughout its network.

Atlanta-based BellSouth serves 44 million customers in Georgia, Tennessee, Florida, Alabama, Kentucky, Mississippi, North Carolina, South Carolina, Louisiana and 14 countries.

BellSouth, one of the four regional phone companies that emerged from the Bell System breakup, also owns 40 percent of Cingular Wireless.

For all of 2002, BellSouth had net income of $1.42 billion, or 76 cents a share. That's a 44.6 percent drop from the $2.57 billion, or $1.36 a share, it earned during the year-ago period. Excluding one-time items, the company said it earned $3.92 billion for the year, compared to $4.42 billion a year earlier. That is in line with Wall Street expectations.

BellSouth said it reduced debt last year to $14.9 billion from $19.5 billion a year earlier.