Deutsche Telecom Misses Estimates, Faces Worker Strike

May.10.07 | About: Deutsche Telekom (DTEGY)

Deutsche Telekom AG saw its profit fall 58% as its fixed land line business continued to be hit by cancellations, with customers abandoning the company for cheaper alternatives. Europe's largest phone company saw sales rise 4.1% to €15.45 billion, ahead of analyst expectation for revenue of €15.3 billion, but profit came in well below expectations (€459 million vs. analyst expectations of €743 million).dt It was the fourth straight quarter of falling net income, as nearly 600,000 land line customers abandoned Deutsche Telecom, up from 500,000 in each quarter last year. The company announced it was selling its Club Internet unit in France, as part of its goal to raise 3 billion euros from asset sales in three years to make up for shrinking German sales. In addition, the company is facing a strike from Germany's ver.di trade union over its plan to cut down on costs by relocating 50,000 employees to new units, and giving them pay cuts.

Sources: Wall Street Journal, Bloomberg, AP, Business Week/Spiegel Online
Commentary: Worldwide Fiber to the Home: Stakeholders And ShareholdersDutch Telecom Consolidation Likely to Accelerate European M&ADeutsche Telekom Reports Q4 Loss, More Restructuring Expected
Stocks/ETFs to watch: Deutsche Telekom AG (DT). Competitors: BT Group (NYSE:BT), France Telecom (FTE), Vodafone Group (NASDAQ:VOD), Telecom Italia (NYSE:TI), Telefonica SA (NYSE:TEF). ETFs: Wireless HOLDRs (NYSEARCA:WMH), iShares MSCI Germany Index (NYSEARCA:EWG)
Conference call transcript: Deutsche Telekom HY 2006 Earnings Conference Call Transcript, Deutsche Telecom Earnings Conference Call Transcript (later today)

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