DOW JONES NEWSWIRES
Embarq Corp.'s (EQ) fourth-quarter net income gained 0.5% as
cost-cutting efforts offset lower revenue.
Shares fell 2.2% to $34.60 in after-hours trading as the local
phone company's revenue fell slightly short of Wall Street's
expectations, though earnings exceeded estimates.
"The strength of our cash flow results, particularly given the
economic environment, illustrates the durability of our business
model," said Chief Executive Thomas Gerke.
Local-phone companies have seen their customers cutting the cord
in favor of wireless phones and other devices, and Embarq put
itself up for sale last year. In October, CenturyTel Inc. (CTL)
agreed to acquire Embarq in an all-stock deal now valued at $5.2
billion, uniting the nation's No. 7 and No. 4 landline operators by
customers. The deal, expected to close in the second quarter, will
create a combined entity with 7.9 million subscribers in 33
states.
Embarq, which was spun off from Sprint Corp. in 2006 after the
merger that created Sprint Nextel Corp. (S), reported net income of
$191 million, or $1.34 a share, up from $190 million, or $1.23 a
share, a year earlier. The results included job-cut costs of $5
million and $31 million, respectively.
Revenue fell 6.2% to $1.48 billion.
Analysts' estimates were for per-share earnings of $1.25 on
revenue of $1.49 billion, according to a poll by Thomson
Reuters.
Operating expenses fell 12%.
Telecommunications segment revenue fell 5.3%, while data revenue
rose 4.7% and high-speed Internet revenue grew 10%.
Embarq ended 2008 with 5.7 million access lines, 9.8% fewer than
a year earlier. The company lost 157,000 lines in the quarter, up
73%. But it added 24,000 high-speed Internet customers, putting the
total at 1.4 million, up 10% from a year earlier. In addition, it
added 13,000 video customers during the quarter, bringing its total
to 297,000.
-By Kathy Shwiff, Dow Jones Newswires; 201-938-5975;
Kathy.Shwiff@dowjones.com