Qwest 3Q profit down; will cut 1,200 jobs

Qwest 3Q profit down; will cut 1,200 jobs
By PETER SVENSSON 10.29.08, 9:26 AM ET
NEW YORK -

Third-quarter profit fell 93 percent at Qwest Communications International Inc. and the phone company plans to cut 1,200 jobs, or slightly more than 3 percent of its work force.

The planned cuts disclosed Wednesday come as Qwest, like other traditional phone companies, are losing customers to cable and cell phones. Qwest's chief executive, Ed Mueller, also said the weak economy was a factor.

"We have taken a number of steps to keep our costs aligned with customer demand and maintain maximum financial strength and flexibility," Mueller said in a statement.

The Denver-based phone company, the country's third-largest, earned $151 million, or 9 cents per share, in the three months ended Sept. 30, down from $2.06 billion, or $1.08 per share, a year ago. The 2007 results were boosted by a tax benefit.

Revenue fell 2 percent to $3.38 billion from $3.43 billion a year ago.

Analysts polled by Thomson Reuters had expected the company to earn 10 cents per share on $3.33 billion in revenue. Analyst estimates typically exclude one-time items, like a $30 million net charge for severance benefits and a lease restructuring in the latest quarter.

Qwest also said it expects results this year to come in at the low end of its previous forecast, which called for which called for earnings before interest, taxes, depreciation and items, or adjusted EBITDA, to fall 1 percent to 2 percent.

Analysts were already expecting a 2.25 percent full-year decline in that earnings measure, which fell 6 percent in the third quarter to $1.08 billion.

Qwest ended the quarter with 11.9 million phone lines, down 8.9 percent from a year ago. The rate of decline is similar to the one reported by larger peers AT&T Inc. and Verizon Communication Inc.

Like AT&T, Qwest posted weak numbers for broadband recruitment in the second quarter but saw a minor rebound in the third quarter, adding 61,000 customers to its high-speed Internet service. Qwest has also increased its capital spending to improve its broadband service.

Services for large businesses were a bright spot, with revenue of $1 billion up 7 percent from a year ago, and Qwest said it had good traction with the government, getting contracts from the Department of Veteran Affairs, NASA and the General Services Administration. However, profit margins declined in the segment.