CenturyLink 2Q profit sinks on revenue loss

Telecommunications company CenturyLink, which changed its name from CenturyTel Inc. last month after purchasing Embarq Corp., on Thursday said its second-quarter profits fell 25 percent.

But the company still beat Wall Street estimates and raised its annual earnings guidance above analysts' predictions.

The Monroe, La.-based company reported earning $69 million, or 68 cents per share. By comparison, the company earned $92.2 million, or 88 cents per share, during the same period a year ago.

CenturyLink reported adjusted income of 83 cents per share, excluding items such as $22.5 million in costs tied to the Embarq acquisition.

Analysts surveyed by Thomson Reuters expected earnings of 80 cents per share.

Revenue declined 3.6 percent from $658 million to $634.5 million, just under analysts' predictions of $634.8 million.

CenturyLink said it lost 33,500 access lines during the quarter or 144,000 access lines, a 7 percent decline, from a year ago, reflecting an industrywide trend as consumers swap their landline phones for wireless and Internet-based telephone services.

"We believe economic conditions represent the primary driver of line losses in our markets, especially in the business sector where we're seeing fewer business startups and more business closings," Chief Executive Glen Post III told analysts during a conference call. "We have seen competitive line losses stabilize overall."

CenturyLink also added about 16,000 high-speed Internet customers during the quarter, or 74,000 since the year-ago period. Post said the company is introducing broadband-only offerings to customers in Embarq markets in the third quarter.

The company bought Overland Park, Kan.-based Embarq on July 1, becoming the third-largest traditional telephone company in the country with a combined 7.3 million access lines.

Following the purchase, CenturyLink said it now expects annual earnings of between $3.20 and $3.30 per share, not including one-time items.

Analysts are expecting earnings of $3.05 per share.

The company added that it now expects cost savings from the Embarq purchase of $475 million, up from the original estimate of $400 million.

It also expects third-quarter earnings of 78 cents to 82 cents per share, compared with analysts' expectations of 78 cents per share.

CenturyLink said Embarq posted an 8 percent decrease in revenue to $1.3 billion during the quarter, losing 163,000 access lines but adding 12,200 high-speed Internet customers.

Combined with Embarq, CenturyLink serves mostly rural customers in 33 states, although it has a few urban markets, including Las Vegas.

Investors sent the shares 18 cents higher to $31.78 in afternoon trading.

(This version CORRECTS that CenturyLink is now 3rd-largest traditional telephone company, not the 4th-largest.)