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Qwest: High Taxes Pushed Our Profit Down

Alert the IRS: Qwest Communications International Inc. (Q) didn’t hit its second-quarter earnings numbers because taxes are too high.

At least that’s what the Denver-based carrier said Wednesday when it reported a 24-percent drop in second-quarter net income, which totaled $188 million. The weird thing is, that’s $31 million more than Qwest made in the first quarter and a penny more per share – 11 cents – than analysts expected. Boo hoo?

Yes, the loss is big compared to the same period a year ago, but CFO John Richardson predicted during the first-quarter earnings call that Qwest’s 2008 net income won’t even come close to 2007’s numbers. In other words, no one should be surprised. And frankly, a jump from $157 in the first quarter seems like a positive. But maybe we’re missing something. Maybe this crying about taxes is big business’s way of trying to get the government to do it a favor (especially since Qwest can’t charge competitors higher rates for access to its network). Heck, if that happened, the rest of us would have to storm the IRS for a tax break too. The big boys shouldn’t be the only ones with all the luck.

Sources

Denver Post: Qwest cites competition in 24 percent income decline

BusinessWeek: Qwest earnings down 24 percent, beat Wall St.

Reuters: Qwest quarterly profit falls 24 percent

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