Thursday, April 29, 2004

Declines in profit, revenue don't shake Cincinnati Bell

By John Byczkowski, James McNair and Jeff McKinney
The Cincinnati Enquirer

Cincinnati Bell Inc. saw declines in revenues and profits in the first quarter, but remained optimistic as it paid down debt and increased per-household revenues, the company reported Wednesday.

"I'm pleased with the results for the quarter," CEO Jack Cassidy told analysts.

LSI Industries also reported quarterly earnings Wednesday, while Peoples Community Bancorp posted its results Tuesday evening.

Cincinnati Bell revenues for the quarter fell 2 percent to $302 million compared with a year ago, due mainly to drops in Bell's traditional voice telephone business and in business equipment sales. Net income was down 20 percent to $72 million, on depreciation and higher costs for acquiring new wireless customers.

On the plus side, Bell said it signed 11,000 new customers for its DSL high-speed Internet service, and 12,000 new wireless customers. It also added 22,000 customers to its "super-bundle" plans offering local phone, long-distance, wireless and DSL.

Bell hopes these moves will help it hold off competition, particularly with the prospect of Time-Warner offering voice service in Greater Cincinnati, along with cable TV and Internet service.

"We see price and value being very important to the consumer," Cassidy said. "It's a front-end game, it's a land grab, and you have to be there at the beginning."

Per-household revenues rose 3 percent to $75.

The company also reduced net debt by $44 million.

Cincinnati Bell stock finished the day little changed, falling 18 cents to $4.

In other earnings news:

LSI Industries

LSI Industries, Blue Ash maker of lighting equipment, reported a 97 percent increase in third-quarter earnings Wednesday.

The company said it posted net income of $920,000 for the three months ended March 31, compared with $468,000 in the same period last year. Quarterly sales were up 16 percent to $51.5 million.

"Certain one-time expenses affected results of the third quarter, including documentation and testing of internal controls as required by Section 404 of the Sarbanes-Oxley Act, and the cost of additional hiring and staffing to meet expected demand," said Bob Ready, president and chief executive officer.

Ready said he was "pleased with the response of our markets to the improving economy."

LSI shares closed at $11.88, down 23 cents.

Peoples Community Bancorp

The parent of Peoples Community Bank posted a 16.7 percent drop in first-quarter profits.

West Chester-based Peoples Community Bancorp Inc. earned $663,000, or 26 cents a share, down from $796,000, or 32 cents a share, from last year's first quarter.

The drop reflected a lower net interest margin, as the bank transitioned its balance sheet for the higher interest rates that it expects in the coming months.

The company said it had higher operating expenses and other costs tied to picking up 16 employees with its acquisition of two branches in Deer Park and Landen from Ameriana Bank last fall.

In addition, Peoples said it has completed its stock rights offering to employees and the community.

The offering raised $26.8 million in new capital. The employee stock-ownership plan's allocation was cut to 35,000 shares from 150,000 shares because of oversubscription.

With assets of $852.5 million, Peoples Community Bank operates 13 branches in Butler, Warren and Hamilton counties.

Shares in Peoples closed at $20.53, up 10 cents.

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