Profits and Prophets: July

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SureWest Surprises With First Quarter Profit; 'O5, '06 Losses Forecast for Refocused GenCorp

By Art Garcia

Analyst Not So Sure About SureWest’s 2005 Outlook
Emphasis on cost-cutting measures, a jump in broadband and wireless revenues and double-digit subscriber growth led SureWest Communications (SURW, Nasdaq) into black ink for its 2005 first quarter, surprising at least one telecom analyst.
    The Roseville-based company’s profit of 6 cents a share for the period was “well ahead” of the penny a share loss he expected, says Christopher King, vice president and equity analyst at Legg Mason Wood Walker in Baltimore.
    The quarter’s $800,000 net income doubled the year-earlier period’s $400,000, equal to 3 cents a share.
    “In light of the quarterly results, we’re raising our 2005 estimate to earnings per share of 16 cents, from a loss of 9 cents a share, and raising our 2006 estimate to earnings per share of 18 cents, from a loss per share of 6 cents,” King says.
    His firm still rates SureWest’s shares as “hold,” based on “the uncertainty about the ongoing pressure on core operations, while the broadband segment remains in the growth phase and costs continue to escalate.”
Continued...

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