Having boasted that unlike its rival MCI Corp its second-quarter figures would be in line with expectations – Sprint Corp yesterday reported results below the Street’s consensus. Competition in the US long-distance telecoms market has seen fierce price cutting during the quarter and it looks like the major players are getting caught. MCI’s second-quarter warning issued last week targeted difficulty in entering the local telecoms market but what when unnoticed by many was that the company said on going competition in its core long distance business was suffering as pricing trends continued to decline. Sprint’s posted a 5.8% increase in revenues to $3.68bn from $3.48bn in the previous year but net income was down $255.9m, or $0.59 per share, after a litigation settlement charge of $20 million pre-tax, or $0.03 per share after-tax, compared to $317 million, or $0.73 per share, in the second quarter of 1996. The First Call consensus earnings estimate for the second quarter was for earnings of $0.63 per share. Sprint’s long distance division revenues rose 8.1% to $2.2bn with local phone revenue up 5.1% to $1.35bn from $1.28bn in last year’s second quarter. Growth came despite increases in Sprint’s bad debt provision, a tougher pricing environment and a very strong second quarter last year, the company said.
