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Sprint announces second-quarter losses of $68 million
Associated Press WriterKANSAS CITY, Mo. (AP) -- Sprint Corp. announced Thursday that it lost $68 million during the second quarter as heavy losses in its wireless division eclipsed gains in its local and long-distance sector.
The Overland Park, Kan.-based company's overall losses off $68 million compared with earnings of $43 million during the same period last year.
William T. Esrey, Sprint's chairman and chief executive, said the company's local and long-distance division "experienced revenue challenges," while PCS had "lower customer additions."
Sprint PCS lost 17 cents per share during the quarter that ended June 30, well below the 7 cents per-share loss predicted by analysts surveyed by Thomson Financial/First Call. During the same period last year, PCS lost $247 million, or 26 cents per share.
Sprint FON, meanwhile, earned $102 million, or 12 cents per share, compared with earnings of $290 million, or 33 cents per share, a year earlier.
But excluding one-time charges that included a $241 million write-down of an investment because of declining market value, Sprint FON earned 36 cents per share during the second quarter, beating analyst expectations of 33 cents per share.
Operating revenue for Sprint FON was down 8 percent to $3.97 billion from $4.31 billion in the second quarter of 2001.
Sprint said that for the year, it expects FON operating income to be slightly more than $2 billion.
Sprint said PCS had just 308,000 new customers in the quarter compared with 843,000 a year ago. The company blamed the low number of customer additions on competition, tightened credit polices and delayed purchases by some businesses in anticipation of the launch of high-speed data services later this summer.
Despite efforts to improve "churn" rates, or customer turnover, by changing its credit policies, Sprint PCS' churn rate was 2.9 percent, up from just over 2 percent a year earlier.
Charles Levine, president of Sprint PCS, said the company expected upcoming promotions would lure more customers.
"In the coming months we'll increase our visibility and our competitiveness," Levine said. The addition of high-speed data services "alone will provide customers a compelling reason to choose Sprint," he added.
Sprint said it continued to expect to add 2.5 million to 2.7 million customers this year. On Wednesday, PCS stock fell amid concerns that it would cut its estimate for 2002 growth. Sprint also said it expects PCS' operating income to be more than $600 million, compared with an operating loss of more than $600 million in 2001.
PCS had operating revenues of $3 billion during the quarter, compared with $2.29 billion a year ago.
Jeffrey Kagan, an independent telecommunications analyst based in Atlanta, said the wireless division's troubles were related to the economy.
"That's something that'll snap back as the new generation of technology rolls out, as people get back to work," he said.
Shares of Sprint FON closed up 56 cents at $12.26 in trading Thursday on the New York Stock Exchange. Shares of PCS were up 50 cents to $5.50.
Sprint, the nation's third-largest long-distance carrier, employs 80,000 people. The company announced July 12 that it will cut 1,100 workers and eliminate another 100 unfilled jobs, bringing the total number of jobs cut since October to at least 13,000.
The cuts will come from the company's global markets division, which includes most of Sprint's long-distance business.
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