Alltel posts quarterly profit, plans to cut jobs

(Adds executive, analyst quotes, forecasts, updates share price)

NEW YORK, Jan 23 (Reuters) - Alltel Corp. (AT), the leading U.S. rural telephone company, on Friday posted a slightly higher fourth-quarter profit as wireless and high-speed Internet services offset declines in its traditional phone business.

The company, which derives more than half of its revenue from wireless, revealed plans to cut 3 percent of its work force but said new rules letting customers keep their number while switching providers did not have a big impact.

Alltel has suffered along with the rest of the industry from fierce wireless competition and a declining wireline telephone market as consumers forsake second phone lines or are lured away by broadband and cellular services.

Guzman & Co. analyst Patrick Comack was impressed that the company managed to keep customer turnover under control without sacrificing profits, unlike No. 2 wireless service Cingular, which posted disappointing results.

"They did a great job on the churn rate and didn't have to sacrifice a lot of margins to do it," said Comack. Alltel did better than its bigger rivals in this respect, he said.

AT&Ticon Wireless Services Inc. (AWE), which has put itself up for sale, also posted an unexpected loss along with high customer turnover.

Little Rock, Arkansas-based Alltel, said net income was $258.9 million, or 83 cents a share, compared with $256.6 million, or 82 cents, last year. Excluding the sale of billing assets it earned 77 cents in the 2003 quarter.

Revenue rose 5 percent, to $2.01 billion from $1.96 billion.

Wall Street, on average, expected earnings of 77 cents a share on revenue of $2.02 billion, according to Reuters Research, a unit of Reuters Plc.

Alltel said it would take a $15 million first-quarter chargeicon for cutting 400 to 600 jobs. The new number switching rules did not hurt customer churn but will continue to affect costs, Kevin Beebe, president of Alltel's communications business, told Reuters.

Alltel forecast a 2 percent to 5 percent increase in revenue in 2004 compared with last year. It forecast 2004 earnings of $3.10 to $3.30 per share versus $3.05 in 2003, excluding earnings from a business it sold in April.

Alltel also approved a $750 million stock repurchase plan representing 5 percent of its total outstanding shares.

Shares of Alltel closed Friday down 34 cents at $49.47 on the New York Stock Exchange. REUTERS