Verizon cuts earnings outlook

Demand for traditional phone lines is shrinking

America's biggest local phone company, Verizon Communications, has cut its earnings forecasts for the year, reflecting the sluggish conditions in the US economy.

The company said it now expected its earnings for 2002 to be between $3.05 and $3.09 per share, against a previous forecast of $3.12 to $3.17.

It also reported a net loss of $2.1bn for the second quarter, caused by one-off charges totalling $4.2bn.

More than $2.4bn of the charges related to a writing-down of its investment in the communications company Genuity.

Excluding the one-off items, Verizon posted a profit of 77 cents a share, which was in line with analysts' expectations.

Shares rise

Despite the cut to the earnings forecast, shares in Verizon jumped as analysts had been expecting a far worse figure.

By mid-morning trade on Wednesday, the shares were $1.75 higher at $31.95 - a rise of 5.8%.

Verizon and other local US telephone companies - or 'Baby Bells' - have seen demand for phone lines hit by the increased use of mobiles and e-mail.

Revenues for the quarter slipped to $16.8bn from $16.9bn in the same period last year.

And revenue at the company's core local telephone business fell by 4.4%, after a 4.1% decline during the first quarter.

But Verizon said it had added 800,000 long-distance customers to give a new total of 9 million.

And it also said the number of customers using its high-speed internet links had risen by 150,000 to 1.5 million.