Qwest's Profits Come Up Just Short
05/06/08 - 03:52 PM EDT
Robert Holmes
Broadband subscribers increased 17.2% in the quarter to 2.7 million. The company said it also added 50,000 net DirecTV (DTV Quote - Cramer on DTV - Stock Picks) subscribers for a total of 699,000 video subscribers, an increase of 42%.
Qwest has been hurt as cable giants Comcast (CMCSA Quote - Cramer on CMCSA - Stock Picks), Cox and Time Warner Cable (TWC Quote - Cramer on TWC - Stock Picks) have aggressively jumped into the phone business as part of their service bundles. Competition has gotten even hotter as satellite names Dish Network (DISH Quote - Cramer on DISH - Stock Picks) and DirecTV have aimed high-definition video programming offers at the growing numbers of big-screen TV owners. Qwest's first-quarter results come a day after it announced a new five-year agreement to market and sell Verizon Wireless service beginning this summer, supplanting ailing Sprint (S Quote - Cramer on S - Stock Picks) as its wireless services vendor. Verizon Wireless is the joint venture between Vodafone (VOD Quote - Cramer on VOD - Stock Picks) and Verizon (VZ Quote - Cramer on VZ - Stock Picks). In a post-earnings call with TheStreet.com, Mueller said the choice to switch to Verizon Wireless was a necessity as Qwest needed a national retail presence not branded under its own name. "We wanted a very good retail partner, one that could also provide next-generation data like 4G," he said. "We have access to all the latest and greatest handsets now." Mueller said even though revenue in the quarter took a hit from the consolidation among telco names, a potential merger between Sprint and Deutsche Telekom (DT Quote - Cramer on DT - Stock Picks) shouldn't impair Qwest. "If there were a Sprint consolidation, something like that wouldn't affect us," he said. When asked about expectations for the company's May 22 shareholder meeting, considering there is a stockholder proposal for an independent director, Mueller said he wouldn't comment on any proxy votes ahead of the meeting.
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