Results upbeat for vendors, not so for carriers

FRAMINGHAM (01/29/2004) - Verizon Communications Inc. and SBC Communications Inc. posted mixed fourth-quarter results, while equipment vendors Nortel Networks Corp. and Avici Systems Inc. both saw top-line growth.

Verizon this week logged a fourth-quarter loss of US$1.5 billion, or $0.53 per share, that includes $3.1 billion in special items - primarily $2.9 billion in previously announced costs associated with a voluntary separation plan under which more than 21,000 employees left the payroll in the quarter.

Excluding special items, Verizon earned $1.6 billion in the quarter, or $0.58 per share, which bested analyst estimates by 2 cents.

Fourth-quarter revenue was largely flat at $17.3 billion, up only 0.7 percent from the prior year's quarter.

For the year, Verizon posted earnings of $3.1 billion, or $1.11 per share, or $7.3 billion - $2.62 per share - before special items. Operating revenues totaled $67.8 billion in 2003, a 0.7 percent increase from 2002.

For SBC, both earnings and revenue were lower. The RBOC recorded fourth-quarter net income of $905 million, or $0.27 per diluted share, compared with $2.4 billion, or $0.71 per diluted share, in the fourth quarter of 2002.

Revenue totaled $10.1 billion, compared with $11.2 billion in the year-earlier period.

SBC's full-year net income was $8.5 billion, or $2.56 per diluted share, compared with $5.7 billion, or $1.69 per diluted share, in 2002. Revenues were $40.8 billion, compared with $43.1 billion in 2002.

Equipment vendors aren't feeling their customers' pain, apparently. Nortel posted fourth-quarter revenues of $2.8 billion, compared to $2.5 billion for the fourth quarter of 2002 and $2.3 billion for the third quarter of 2003.

Nortel netted earnings of $499 million, or $0.11 per common share. For the same period a year ago, Nortel lost $168 million, or $0.04 per common share, while posting a profit of $185 million, or $0.04 per common share, in the third quarter of 2003.

For the full year, Nortel's revenue of $9.8 billion was down from $10.6 billion for 2002. Net earnings came in at $732 million, or $0.17 per common share, compared to a net loss of $3.3 billion, or $0.85 per common share, for the year 2002.

Nortel expects a seasonal decline in revenue for the first quarter of 2004 compared to the fourth quarter of 2003.

Nortel partner Avici Systems saw substantial top-line growth for the quarter and the year. Gross revenues for the fourth quarter and full year were $11.5 million and $39.4 million, respectively, compared to $7.3 million and $33.1 million in the comparable periods a year ago.

These represent an increase of 57.5 percent compared to the prior year's fourth quarter and an annual increase of 19 percent.

The company also trimmed its quarterly and year-end losses. Net loss for the fourth quarter was $3.9 million, or $0.32 per share, compared to a net loss of $14.1 million, or $1.13 per share, in the prior year's fourth quarter.

Avici's net loss for the year was $37.0 million, or $3.02 per share, compared to $64.8 million, or $5.20 per share, for the same period a year ago.

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