Regional phone giant SBC Communications Inc., which owns California's largest phone company, said Monday it will eliminate "several thousand" jobs and reduce spending on an Internet project after third-quarter profit fell 31%.
SBC executives will spend the next few weeks deciding exactly how many jobs will be cut and where the layoffs will be. California, with 60,500 of the company's 216,000 employees, likely will be "hit the hardest," a spokesman for the San Antonio, Texas, company said. SBC owns Pacific Bell, the largest provider of residential phone service in the Golden State.
SBC's profit in the three months ended Sept. 30 fell to $2.1 billion, or 61 cents a share, from $3 billion, or 88 cents, in the year-earlier quarter, when SBC sold assets in Europe. Sales rose less than 1%, to $13.5 billion.
SBC and other phone companies are shedding costs as sales slow dramatically. Excluding a $73-million pension settlement gain, SBC would have earned $2 billion, or 59 cents. On that basis, SBC was forecast to have profit of 60 cents, the average of analysts polled by Thomson Financial/First Call.
The year-earlier period included a $1.1 billion gain mainly from selling investments in Europe.
SBC expects per-share profit before one-time items this year at the bottom of its previous forecast of $2.35 to $2.40.
Companies in SBC's 13-state region have fired more than 160,000 workers, Chief Executive Edward Whitacre saidMonday. SBC will scale back the expansion of its high-speed Internet service, known as digital subscriber lines, or DSL.
Sales of DSL and other data services rose 10% to $2.2 billion in the third quarter, but that's down from a 28% increase in the second quarter. SBC had 1.2 million DSL lines in service at the end of the period, more than twice the year-earlier figure. SBC added 150,000 DSL lines in the quarter, compared with 83,000 in the second. SBC will cut back its DSL service, targeted to reach 77 million people by the end of next year, by about 10%.
Whitacre said SBC officials "don't see anything that would indicate a quick turnaround in the economy."
SBC shares fell $2.24, or 5.1%, to $41.40 in New York Stock Exchange trading Monday.
In other technology earnings reported Monday:
*Samsung Electronics Co.'s third-quarter profit tumbled 75%, to $323 million, as its memory-chip business--the world's largest--lost money as prices fell to half the cost of production. The chip business lost $289 million on an operating basis, compared with a $228 million profit in the previous quarter. Samsung is profitable because of its telecommunications business. Sales fell 18% to $547 million.
*SeeBeyond Technology Corp., a Monrovia maker of networking software, said its third-quarter loss narrowed to $7.8 million, from $9.9 million a year earlier, as sales rose 35%, to $42.1 million.
*Silicon Graphics Inc., a Mountain View, Calif., network computer maker, said fiscal first-quarter losses rose to $69 million, or 36 cents a share, from a $49 million deficit, or 26 cents, a year earlier. Revenue fell 11%, to $379 million.
*Vitesse Semiconductor said its fiscal fourth-quarter loss totaled $59.2 million, or 30 cents a share including one-time charges, compared with net income of $11.6 million, or 6 cents, a year earlier. Sales plunged 73% to $37.2 million. The Camarillo-based firm said the loss excluding one-time charges was $28.1 million, or 14 cents a share. It also forecast an operating loss in the current quarter.