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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.

*Reiterates annual forecast for 58% profit fall

*May miss outlook by 90 bln yen if yen unchanged

*Shares close up 2 percent ahead of results (Adds comments from Sony (nyse: SNE - news - people ) CFO, analyst)

By Kiyoshi Takenaka

TOKYO, Oct 29 (Reuters) - Sony Corp posted a 90 percent fall in quarterly profit as the global slowdown boosted the yen, battered stocks and stoked price competition, and the company kept its annual profit outlook of a 58 percent decline.

The steep profit slide was expected after the electronics and entertainment conglomerate last week cut its annual operating profit forecast by 57 percent, citing yen strength, slowing digital camera and flat TV demand and tumbling share prices.

The maker of Bravia flat TVs, Cyber-shot digital cameras and PlayStation game machines warned on Wednesday it might miss even the revised-down target by a large margin if the yen continues to trade at current levels against the dollar and euro.

A firmer yen eats into exporters' overseas revenues when they are converted into the Japanese currency.

Operating profit totalled 11.05 billion yen ($111.5 million) in July-September, down from 111.62 billion yen a year earlier as a sharp fall in Tokyo shares forced Sony's financial unit to post appraisal losses in its convertible bond holdings.

A one-off profit of 60.7 billion yen from a land sale that Sony posted in the corresponding period a year earlier also made impacted the scale of the decline.

Net profit fell 72 percent to 20.8 billion yen on sales of 2.07 trillion yen, down 0.5 percent.

The electronics and entertainment conglomerate competes with Canon Inc (nyse: CAJ - news - people ) in digital cameras, Samsung Electronics Co Ltd in LCD TVs, and Microsoft Corp (nasdaq: MSFT - news - people ) and Nintendo Co Ltd (other-otc: NTDOY.PK - news - people ) in video games.

Sony reaffirmed an operating profit forecast it issued last Thursday of 200 billion yen for the year to March, down from 475.3 billion yen a year earlier.

Earlier this week, Canon cut its annual operating profit forecast by one quarter on a firmer yen and cooling consumer sentiment, while Panasonic Corp stood by its original full-year outlook of 8 percent profit growth.

"If Panasonic ends up posting a year-on-year profit decline, it would be a fall of 20 or 30 percent tops," Daiwa Institute of Research analyst Kazuharu Miura said.

"On the other hand, Sony's earnings cannot help swing violently due to changes in outer factors. Unless Sony rectifies this structural problem, it would be experiencing a profit decline of a similar magnitude in five years or so."

In announcing its latest outlook on Thursday, Sony said it may close some plants, reduce capital spending and cut jobs.

For a graphic on Sony's historical operating profits, click https://customers.reuters.com/d/graphics/JP_SNYQ1008.gif

DOWNSIDE RISK

Reiterating similar comments made last week, Sony said it might miss its latest outlook by 90 billion yen if the Japanese currency stays at 97 or 98 yen per dollar and at 125 yen a euro, levels seen on Wednesday morning.

Its annual forecast is based on assumptions that the yen trades at 100 yen per dollar and 140 yen a euro in the fiscal second half, and on the premise that the Tokyo stock market will remain unchanged from levels of Sept 30 in the six months.

In reality, Tokyo's benchmark Nikkei average has lost more than a quarter of its value so far this month.

Analysts polled by Reuters Estimates on average expect Sony to post an annual operating profit of 158.2 billion yen.

Adding to Japanese technology companies' woes is a softer won since a weaker South Korean currency helps boost the price competitiveness of products made by rivals Samsung and LG Electronics Inc.

"Samsung seems to have been getting more aggressive recently on TV pricing and promotional campaigns," Sony Chief Financial Officer Nobuyuki Oneda told a news conference.

"I assume a softer won is one factor behind those moves."

Samsung is the No.1 LCD TV maker while Sony ranks second.

Prior to the announcement, shares in Sony closed up 2 percent at 2,035 yen, underperforming the Tokyo stock market's electrical machinery index, which rose 6.7 percent.

Sony shares have lost 68 percent since the start of the year through Tuesday, while the subindex slid 56 percent. (Reporting by Kiyoshi Takenaka; Editing by Dhara Ranasinghe and David Cowell)