Qwest income rises in Q4, revenue dips

Staff and Wire Reports

Published February 12, 2008 at 7:32 a.m.
Updated February 12, 2008 at 8:26 a.m.

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Qwest Communications announced today that its fourth-quarter earnings rose 89 percent, as operating costs fell. A tax benefit also helped earnings.

The Denver telco said net income rose to $366 million from $194 million a year earlier. That amounts to 20 cents per share, up from 10 cents per share in 2006 and is better than the 14 cents per share expected by analysts surveyed in a Thomson Financial poll.

But Qwest's revenue slid 1.5 percent to $3.4 billion, and CEO Ed Mueller said the company experienced a “tough December in retail.”

He told analysts in a conference call that a decline in traditional land lines was offset by growth in high-speed Internet services.

Mueller reiterated that Qwest is accelerating its investment in broadband as part of its strategy to tackle its challenges.

Qwest has also declared a dividend of 8 cents, the company's first payout since 2001.

Shares rose more than 5 percent, or 27 cents, to $5.40 at the open of trading on the New York Stock Exchange.

In a research note published Tuesday, Banc of America analyst David Barden called the results “a solid setup for 2008.

“We see no signs yet of material business weakness that would dramatically alter the company’s cash flow story.”

For the year, Qwest reported net income of $2.9 billion, or $1.52 per share, compared with $593 million, or 30 cents a share, in 2006. Revenue dipped 1 percent to $13.8 billion from $13.9 billion.

Operating expenses for 2007 totaled $12 billion including which included $393 million in litigation charges.

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