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Qwest Profit Slumps 39%, Even on Cost Cuts

Qwest Communications International Inc. (Q) cut its expenses significantly in the fourth quarter, through layoffs and other measures, but not enough to keep its net income from falling as a soft housing market and high unemployment continued to impact buying patterns.

Still, the Denver-based Bell reported a profit on Tuesday of $108 million, although that was down 39 percent from $177 million in the year-earlier period. Revenue, too, was lower, hitting $2.99 billion, a 9.7 percent drop.

More consumers axed their landline connections in the fourth quarter, for an 11 percent decrease in legacy revenue, but Qwest somewhat made up for the losses with the addition of 64,000 wireless customers. Qwest offers mobile phone service through a resale deal with Verizon Wireless. Qwest also added 23,000 DirecTV subscribers, and another 23,000 broadband users, 14 percent of whom use FTTN services. Overall, sales in the mass markets division fell 13 percent to $1.2 billion.

On the business side, Qwest’s wholesale unit saw revenue decline 14 percent to $679 million on falling long-distance demand. However, Qwest offset some of the losses with lower facilities and channel expenses. The business markets group, meanwhile, showed only a 2 percent revenue drop. Sales amounted to $1.03 billion thanks mostly to a 24 percent jump in IP services consumption.

Operating expenses fell 7.7 percent in the fourth quarter to $2.54 billion – part of that was due to layoffs. Qwest cut 4 percent of jobs and ended 2009 with 30,100 workers.

Qwest’s outlook for 2010 appears to be improving, though. The company said revenue decline would fall and projected higher cash flow for the year. Qwest shares were trading at $4.49 around noon Eastern, up 1.35 percent.


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