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Sprint Shares Stumble After Earnings Report

The FON group's profit from continuing operations was less than expected.

Updated from 8:47 a.m. EST


, which is expected to merge with

MCI WorldCom


in the second half of this year, posted solid earnings at both its core

Sprint FON Group


and wireless

Sprint PCS Group



For FON Group's fourth quarter ended Dec. 31, income rose to $416 million, or 47 cents a diluted share, compared to $404 million, or 45 cents a share pro forma, a year ago. The consensus estimate of analysts polled by

First Call/Thomson Financial

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was 38 cents. However, that figure is actually 43 cents after replacing dilution for the sale of its stake in

Global One

. Sprint agreed to

sell its stake in the international telecommunications venture last week.

Revenue rose to $4.41 billion from $4.08 billion a year ago.

The pro forma 1998 numbers take into account the November 1998 restructuring of

Sprint PCS

and Sprint common shares into two separate classes, FON stock and PCS stock. They also take into account a 2-for-1 stock split of FON stock in the second quarter of 1999.

In addition, long-distance revenues were up 7% to $2.71 billion from $2.52 billion in the fourth quarter of 1998, while calling volumes rose 20%. The rise in revenue growth was slower than expected, mostly on pricing competition in the sector.

Local telecommunications revenues also increased 7% to $1.48 billion from $1.38 billion a year earlier.

For PCS group's fourth quarter ended Dec. 31, the loss before extraordinary items came to $706 million, or 75 cents a diluted share, compared to $616 million, or 72 cents a share pro forma, a year earlier. Including a $31 million, or 4-cent-a-diluted-share, extraordinary loss, last year's net loss came to $647 million, or 76 cents a diluted share. First Call expected a loss of 72 cents a share.

Net operating revenue rose to $996 million from $437 million a year ago.

Sprint PCS added more than 1 million new customers in the quarter, ending 1999 with a total of more than 5.7 million subscribers. Average monthly revenue per user remained steady at $54 for the quarter. In midday trading, shares of the FON Group were down 3/4, or 1%, to 63 7/8 while shares in the PCS Group were down 9/16 to 109 1/2. (FON Group shares closed down 1 1/4, or 1.9%, at 63 3/8. PCS Group shares were up 1 3/4, or 1.6%, at 111 13/16.)

The shares, which trade in line with MCI WorldCom, were likely down on profit-taking as both companies, like many telecommunications companies, were up significantly Monday. Sprint FON Group was up 7% and Sprint PCS was up 9%, while MCI WorldCom was up 10%.