Updated from 1:06 p.m. EDT
With a burst of new customers subscribing to its wireless services and bundling of wireline products,
surpassed Wall Street's expectations. The Kansas City, Mo.-based company's two units:
posted better-than-expected numbers.
Sprint is poised to be fully acquired by
in the second half of 2000, pending shareholder approval from a vote April 28.
Sprint said Tuesday its Sprint Fon, or FON Group, had earned 65 cents a share in the first quarter, excluding a one-time 2-cent gain from core operations, up 18% from 55 cents in the year-earlier quarter. The figures beat a
First Call/Thomson Financial
consensus expectation of 47 cents.
Shares of Sprint FON rose 1 1/4, or 2.1%, to 57 15/16 in midday trading. (Sprint FON closed up 1, or 1.8%, at 57 3/4.)
"The FON Group has started the year on a strong note,'' Esrey said in a statement. "Our core businesses' strong showing was attributable to continued execution on all fronts and strong demand for Sprint's bundled services.''
Net income, excluding a one-time gain of $647 million from the sale of its investment in
, rose to $473 billion in the quarter, up from $406 million in the first quarter of 1999.
William Esrey, Sprint chairman and chief executive said higher-margin bundled phone services boosted revenues 7% to $4.4 billion for in the period from $4.11 billion in the same quarter a year ago.
Operating income for the unit, which include local and long-distance phone service, increased 14% to $907 million in the period from $795 million in the same quarter last year.
Sprint's wireless unit, Sprint PCS, also had an exceptional quarter, attracting 831,000 new subscribers and beating estimates, with a net loss from operations of 54 cents, up 24% from the year-ago quarter. Analyst's were expecting 711,400 new accounts and a loss of 58 cents for the quarter, according to
First Call/Thomson Financial
"The U.S. is really heating up this quarter for wireless service," said Jeff Hines, an analyst at
Deutsche Banc Alex Brown
, who rates the stock a market perform. Hines also said that he is currently weighing the prospect of upwardly revising his rating and estimates for PCS.
At a conference for the wireless industry and analysts earlier this week, executives behind some of the leading companies in the industry forecasted stronger net customer additions than Hines had anticipated. They now estimate that the U.S. will see 23 million new customers for 2000, up from 20.7 million.
"Usually when a wireless adds customers there are up front costs associated with it. That leads to more losses," Hines said. "But Sprint added all those new customers and still blew away our estimates."
PCS had rallied 4 3/4, or 10%, to 51 1/2 by midday. (PCS finished up 6 11/16, or 14.3%, at 53 7/16.)
"Results looked very strong for Sprint and continued growth in the whole industry," said William Power, an analyst at
J.C. Bradford & Co.,
who rates Sprint PCS a strong buy. His firm has done no recent underwriting for the company.
"Their churn rate was 3.0 %, compared with 3.2% in the comparable quarter and that's a sign that their customer base is becoming more stable." Including the traditional analog cellular phone companies, the industry average is around 2.5%, Power added.
Sprint PCS continues to outpace the wireless industry by a substantial margin, Esrey said in a statement.
Sprint PCS deals with
to provide wireless Web service and with
to connect drivers to the Internet are expected to add to revenues later this summer.
Sprint also raised its expectations for new users to 3.8 million for the full year from previously forecasted 3.3 million, in a conference call with analysts and investors Tuesday. Power, who had expected the lower number, said the forecast was a very bullish sign.