Qwest's Profits Come Up Just Short

Qwest Q missed Wall Street's estimates Monday with its first-quarter results, blaming the miss on savage competition and economic pressures, particularly in Western states most affected by the housing slump.

The Denver phone- and data-services provider said it had a first-quarter profit of $157 million, or 9 cents a share, falling from $240 million, or 12 cents a share, in the year-ago period. Qwest said it began recording its income tax expense at normal effective rates in the first quarter, which resulted in $99 million of income tax expense compared to $2 million in the same quarter a year earlier.

Revenue slipped 1.5% to $3.40 billion from $3.45 billion a year earlier, which Qwest said reflects the impact of industry consolidation and long-distance pricing pressure.

Analysts were looking for earnings of 10 cents a share on revenue of $3.42 billion, according to Thomson Reuters. Qwest was falling 26 cents, or 4.9%, to $5.10.

"Since the beginning of the year, we have demonstrated notable progress on our strategies for success, including announcing a new wireless model and executing on our fiber-to-the-node build-out, which is ahead of plan for the year," said CEO Ed Mueller in a release. "In addition, we continue to effectively compete for customers in a challenging economic climate."

Qwest said that mass markets revenue slipped 0.7% to $1.48 billion in the quarter, as a 20.7% rise in data, Internet and video revenue was offset by declines in both voice and wireless services. Sequential revenue was essentially flat.