BellSouth Corp. (BLS), the No. 3 U.S. telecommunications company, on Tuesday said its fourth-quarter operating earnings fell due to lower profits from its stake in Cingular Wireless (search) and higher costs in its wireline telephone business.

While the results were below analysts' estimates, BellSouth said earnings had been affected by several one-time costs and profit margins should rebound over the next few quarters.

BellSouth said its net earnings totaled $1.47 billion, or 80 cents per share, compared with $787 million, or 43 cents a share, a year earlier. Those results include a one-time gain of $915 million on the sale of its Latin American operations, as well as some profits from those businesses.

The company said earnings from continuing operations adjusted for its 40 percent stake in Cingular Wireless fell to $640 million, or 35 cents a share, from $846 million, or 46 cents a share, in the same period a year earlier.

Those results exclude 8 cents per share in costs from hurricane damage in BellSouth's region, Cingular's purchase of AT&T Wireless (search) and job reductions.

Revenues including Cingular rose 19.5 percent to $7.92 billion due to the Cingular-AT&T Wireless merger. Cingular, the largest U.S. wireless company, added 1.8 million net new customers during the quarter, but costs rose.

Analysts on average had expected BellSouth to report adjusted earnings of 41 cents per share on revenues of $7.95 billion, according to Reuters Estimates. Analyst Greg Gorbatenko of Marquis Investment Research said that, while Cingular's numbers were strong, the rest of BellSouth's results were "murky."

"Overall, it is hard for us to get too excited about how (BellSouth) is doing," Gorbatenko said in a research note. "We believe the current price the market is giving (BellSouth) is fair."

BellSouth shares were down 41 cents at $26.15 on the New York Stock Exchange.

As with the other "Baby Bells (search)," BellSouth has been emphasizing its growing wireless and high-speed Internet access business, using them to offset the slow erosion of its landline customers to competitors. Those efforts kept revenues from its landline business flat at $4.6 billion during the quarter.

BellSouth's total number of access lines in service fell 1 percent from the third quarter of 2004 to 21.4 million, but it added 224,000 broadband lines and 467,000 residential long- distance customers. The number of lines leased by competitors fell 108,000 to 2.1 million.

BellSouth also added about 110,000 subscribers to DirecTV's satellite television service during the quarter. The Bells have cut deals to resell satellite TV as a way to fight cable companies, who are launching competitive telephone services.

The company told analyst in December that its total revenue, including Cingular should grow by a mid- to high-teens percentage in 2005, while revenues from traditional communications are expected to be flat.