Broadwing Wrings Solid Quarter Out of Phone Business

Broadwing ( BRW), which is in the process of shedding its broadband unit and returning to its phone-company roots, swung to a bottom-line profit in the first quarter and posted improved earnings from continuing operations.

The Cincinnati telecom earned $123.8 million, or 55 cents a share, in the latest quarter, reflecting a gain from new accounting rules. It lost $1.82 billion, or $8.38 a share, last year, reflecting an accounting charge.

On a continuing basis, the company earned $37.9 million, or 16 cents a share, in the latest quarter compared with a loss of $33.5 million, or 17 cents a share, last year. The improvement reflected a big decline in its amortization and depreciation expense.

Analysts had been predicting a loss of 5 cents a share.

Revenue fell to $480.7 million from $542.8 million last year, reflecting a 2% increase at its Cincinnati Bell unit and a 22% decline at the broadband unit, which is being sold. The company is changing its corporate name back to Cincinnati Bell.

Broadwing went through $33 million of cash in the quarter, down 70% from a year ago and 17% sequentially.

Among its segments, Cincinnati Bell saw revenue rise 2% to $297 million, as data and Internet services sold well to business customers. Wireless revenue rose 1% to $64 million. Broadwing ended the quarter with about 470,000 wireless subscribers, about the same as at the end of last year.

Broadwing's broadband unit saw revenue decline 22% to $211 million, reflecting customer bankruptcies, the exiting of certain businesses, and weak demand the company blamed on economic and industry factors.

Investors focused on the telephone company's relative success and bid up the shares 6.8% to $5.37.

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