Southern Talk for Income Investors

In the public utility business, as in real estate, location is more than slightly important these days. That truism has been proven yet again by Southern Company (NYSE: SO), which rode the strength of its Atlanta-based market to strong second-quarter results.

For the quarter, the company earned $429 million, or $0.57 for each diluted share, compared to $385 million, or $0.52 a share, last year. If you back out the contribution from Southern Company's synthetic-fuels investments, earnings for the quarter were $417 million, or $0.55 a share, versus that same $0.52 last year. Revenues rose 5% in the quarter to $3.77 billion, from $3.59 billion in the second quarter of 2006.

The biggest boost to the company's financial results for the quarter appeared to be a 1.6% growth in total customers, which management called, "a reflection of the economy of the Southeast." At the same time, seemingly like businesses everywhere, the company experienced higher expenses for operations, maintenance, interest, and depreciation. And, despite the overall strength of the regional economy, the sales breakdown for the quarter was something of a mixed bag, with residential electricity sales increasing 0.4%, while commercial sales were up 1.7%, and sales to the industrial sector declined by 1%.

Despite Southern Company's solid results, it's too early to get a definitive grip on general public utility trends for the quarter. Yes, American Electric Power (NYSE: AEP) released reasonably good results on Tuesday, but I'll nevertheless await missives from the likes of Dominion Resources (NYSE: D) and Duke Energy (NYSE: DUK), which will release later this week and next week, respectively, before making any sweeping proclamations about the utility space.

To look at related Foolishness:

• No Drawl in This Southern Quarter
• Great Investments for Busy People
• An Interview with Duke Energy CEO Jim Rogers

Fool contributor David Lee Smith does not own shares in any of the companies mentioned. He welcomes your comments or questions. Southern Company and Duke Energy are Motley Fool Income Investor selections. The Motley Fool has a disclosure policy.