Qwest profit falls 49 percent in 4th quarter, beats view

NEW YORK — Fourth-quarter earnings fell 49 percent at Qwest Communications International Inc. from a year ago, mainly due to tax effects, while cost-cutting helped its underlying performance beat Wall Street expectations.

Its shares rose 21 cents, or 6.2 percent, to $3.58 in morning trading.

The Denver-based phone company on Tuesday said it earned $185 million, or 11 cents per share, in the October-December period, down from $366 million, or 20 cents per share, a year ago.

The latest results included a charge of a penny per share for severance payments. The company cut 1,700 jobs in the quarter, more than the 1,200 layoffs it had announced.

"We exceeded our goal in achieving employee reductions that will give us a leg up on this year's profitability objectives," said chief executive Ed Mueller.

Analysts polled by Thomson Reuters expected lower earnings, at 10 cents per share.

Qwest's revenue slipped 3 percent to $3.32 billion from $3.44 billion a year ago as consumers continued to drop landlines. Also, Qwest during the year dropped an arrangement under which it resold Sprint Nextel Corp.'s wireless service under its own name. Instead, it promotes Verizon Wireless service and gets a cut of those fees.

Analysts welcomed the results.

"We reiterate our Buy rating on Qwest and believe the solid revenue and cash flow performance in a challenging (fourth quarter) bodes well for cash flow prospects in '09," wrote Michael Rollins at Citigroup.

Qwest ended the year with 8 million consumer and small-business phone lines in service, a loss of 219,000 in the last quarter as customers continued to go wireless-only, or switch to cable phone service.

Qwest added 54,000 broadband subscribers, but growth in this segment is slowing substantially. In the same quarter a year ago, it added 95,000 customers, which was also down from the previous year.

The company has been upgrading its network to compete with cable, and said it is now able to offer higher Internet speeds to 1.9 million households, exceeding its goal of 1.5 million.

Qwest's business services segment did relatively well, with revenue up 4 percent year over year despite a dismal business climate.

The wholesale division, which carries long-haul data and phone traffic, saw revenue decline 7 percent.