Corning, SBC warn profit will be
at low-end of forecasts

Susan Rush
From the October 9th edition of CED Broadband Direct

Demand in the telecom sector remains weak, and Corning Inc. and SBC Communications Inc. say they are feeling the pinch. Both companies have issued warnings that their financials will be at the low-end of their earlier forecasts.

Corning expects to post third-quarter revenue in the range of $830 million to $840 million and a net loss of between 7 cents and 8 cents a share. In July the company forecast a loss of seven cents to 10 cents a share on revenue of between $825 million and $875 million.

Although Corning is glad that it was able to meet its earlier quarterly guidance, it says the outlook for the telecom sector remains difficult. The murky outlook will force Corning to further restructure its operations in the fourth quarter, although it did not outline specifics.

Previously, the company said that further restructuring moves could encompass more staff cuts, the potential sale of or discontinuation of some non-core assets, plant closures and consolidation of manufacturing capacity in the telecom sector. In April, Corning said it would cut 4,400 jobs this year. The company eliminated 10,000 last year.

At the end of the quarter, which ended Sept. 30, Corning had cash and short-term investments of more than $1.5 billion. The company still expects to return to profitability next year. Corning will report its full Q3 results on Oct. 30.

Separately, SBC said it expects record full-year profit of roughly $2.26 per share. This falls at the low end of an earlier forecast calling for per share profit to range between $2.26 and $2.35.

Last month, SBC announced plans to cut another 11,000 jobs by early 2003, 9,000 of which will be eliminated in the fourth quarter.

The company blames regulators for its financial woes, saying wholesale prices set by regulators are below cost. SBC has been fighting against this and other regulations imposed on telecoms, but are not imposed on the cable operators.

SBC has reaffirmed plans to reduce its capital expenditures to be in the range of $5 billion and $6 billion in 2003. SBC has a 2002 capital expenditure budget of just under $8 billion.

SBC will report its third-quarter results on Oct. 24.