Qwest Drops Restatement Bomb

Qwest(Q Quote) says it overstated both its past results and future prospects.

Citing mistakes in its handling of controversial optical capacity swaps and other revenue recognition issues totaling $1.16 billion, the telephone company said it will restate its results for 1999, 2000 and 2001. The news comes amid a Securities and Exchange Commission probe of the company's accounting and at a time of investor disgust with corporate bookkeeping in the wake of scandals at WorldCom, Adelphia and Enron.

The decision to restate also follows the appointment in June of new management at Qwest, including CEO Richard Notebaert, who replaced Joseph Nacchio. Investors are now forced to grapple with the question of whether the accounting steps signal a fresh start at the troubled telecom or are more evidence that the company's liquidity issues are irresolvable. ...