[1st-mile-nm] Qwest: 3Q Net Falls

[Richard Lowenberg]

UPDATE: Qwest Communications 3Q Net Falls 93% On Year-Ago Gain

Dow Jones
October 29, 2008: 09:03 AM EST

http://money.cnn.com/news/newsfeeds/articles/djf500/200810290903DOWJONESDJONLINE000558_FORTUNE5.htm

NEW YORK -(Dow Jones)- Qwest Communications International Inc. (Q) reported a
93% drop in third-quarter profit as the decline in consumer spending and
competitive pressure from cable takes its toll on the telecommunications
provider.

The Denver company said that fewer consumer access lines and a less profitable
revenue mix contributed to lower profit margins. Qwest expects a decline in
revenue and adjusted earnings for the year and plans to cut 1,200 jobs, or 3%,
of its work force, as it becomes increasingly clear that the macroeconomic
environment will slow the company's turnaround efforts.

"In the quarter, our financial results were again mixed," Chairman and Chief
Executive Edward Mueller said in a statement. "Reflecting our cautious outlook
on the near-term direction of the economy, we have taken a number of steps to
keep our costs aligned with customer demand and maintain maximum financial
strength and flexibility."

Profit totaled $151 million, or 9 cents a share, versus $2.07 billion, or $ 1.08
a share, a year earlier. Results from a year ago were helped by a tax benefit of
$2.1 billion.

Revenue fell 1.6% to $3.38 billion from $3.43 billion.

Per-share earnings fell below analysts' average estimates of 10 cents, though
revenue topped expectations.

Like fellow Bells AT&T Inc. (T) and Verizon Communications Inc. (VZ), Qwest
continued to be hit by cable competition. The company doubled the number of new
digital-subscriber-line customers to 61,000 from the surprisingly weak second
quarter, but it is a far cry from year-ago numbers.

Cable companies have won the larger share of new high-speed customers, seen as
the most crucial of the triple-play services - Internet, television and
telephone. Comcast Corp. (CMCSK) said Wednesday that it alone added 382,000
high-speed Internet customers.

Unlike its peers, Qwest doesn't have growth drivers in its own television or
wireless service. Instead, it partners with DirecTV Group Inc. (DTV) for
satellite TV and Verizon Wireless for wireless service. The company added
39,000 video subscribers but lost 45,000 wireless subscribers due to its
efforts to move customers over to Verizon Wireless from Sprint Nextel Corp.
(S). Verizon Wireless is jointly owned by Verizon Communications and Vodafone
PLC (VOD).

Total access lines fell 8.9% to 11.9 million, led by a sharp decline in the
wholesale business.

Qwest expects full-year results to be at the low end of prior forecasts, which
means a 2.5% decline in revenue, a 2% decline in adjusted earnings before
interest, taxes, depreciation and amortization and $1.5 billion in adjusted
free cash flow.

The job cuts come just weeks after Qwest settled a contract dispute with its
union.

Qwest shares traded down 1.9% to $2.55 in premarket action.


-- 
Richard Lowenberg
1st-Mile Institute
P.O. Box 8001, Santa Fe, NM 87504
505-989-9110;   505-603-5200 cell
rl at 1st-mile.com  www.1st-mile.com

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