Bell's earnings rise 13.5% Consumer demand boosts income in first quarter

April 19, 1996|By Michael Dresser | Michael Dresser,SUN STAFF

Strong consumer demand for communications, both wired and wireless, propelled Bell Atlantic Corp. to an unexpectedly strong 13.5 percent increase in first-quarter earnings, the company reported yesterday.

Bell Atlantic's net income for the quarter that ended March 31 jumped to $470.5 million, or $1.07 a share, from $414.5 million, or 95 cents a share, during the first quarter of 1995. The results exceed the Wall Street consensus projection of $1.04.

Corporate revenues increased to $1.14 billion from $1.08 billion during the same quarter last year.

The Philadelphia-based telephone company said its number of access lines in service passed 20 million, for a 3.5 percent year-to-year gain. Customers stayed on the line longer too; minutes of use increased 12.7 percent.

Contributing to the growth of the network was strong demand for second telephone lines among residential customers -- many of whom use them to connect their computers to the outside world. The company said 13 percent of its residential customers now have secondary lines, compared with 10 percent a year ago.

Raymond W. Smith, Bell Atlantic's chairman and chief executive officer, said in a statement that the company's network business had entered a new growth cycle.

"The on-line revolution is boosting access line gains, while the emergence of the high-value consumer is driving penetration of a wide range of value-added, call management products," he said. "Our domestic wireless business continues to write new chapters in its success story, which we're beginning to see repeated in our international holdings."

Bell Atlantic said the 5.7 percent revenue growth from its wired network was bolstered by strong sales of enhanced services such as Caller ID and Call Waiting, which grew more than 23

percent over the past 12 months.

Donna Coward, a telecommunications analyst with Wheat First Butcher Singer in Richmond, Va., said Bell Atlantic's 3.5 percent access line growth was strong, but not as impressive as the increases at two other regional Bells -- 4.5 percent at Ameritech Corp. and 4.9 percent at SBC Communications Corp.

Ms. Coward said Bell Atlantic's strong earnings also were a result of productivity gains. She said the company's employee head count was down 6.5 percent from last year and that the number of access lines per employee grew 10.7 percent.

The company also reported booming growth at its cellular affiliate, Bell Atlantic Nynex Mobile. That company, a joint venture with Nynex Corp., reported that its operating revenues grew 30 percent to reach $550 million. The company added 217,000 new subscribers during the quarter, giving it an annual growth rate of 42 percent. Operating cash flow was up 79 percent.

Connie Luecke, a telecommunications analyst with Duff & Phelps Equity Research in Chicago, said she could find nothing negative in the report. She said the access line growth shows a turnaround from last year.

"I didn't think they had done a very good job growing their telephone business," Ms. Leucke said. "They were lagging the group."

Pub Date: 4/19/96

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