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Top-Line Pain for Qwest

Revenue slips 5.4% as most of its segments see shrinking sales.
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A big gain related to the sale of its phone-book division lifted

Qwest

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to a profit of $1.8 billion in its third quarter, despite a 5.4% slip on the top line that included a 15% slide in wireless revenue. The company also offered to redeem $2.25 billion of debt held in several bond series.

Third-quarter earnings came out to $1.05 a share, compared with a loss of $123 million, or 7 cents a share, last year. Revenue was $3.57 billion in the latest quarter compared with $3.77 billion a year ago. Analysts had been looking for revenue of about $3.6 billion.

The latest quarter included a $2.5 billion gain related to the sale of QwestDex, a $393 million charge to terminate some vendor relationships and a $230 million impairment charge reflected expected lower usage of the company's wireless network. On an operating basis that includes the two charges but not the gain, Qwest lost $523 million in the third quarter compared with income of $76 million a year ago.

By segment, local-voice operating revenue fell 9.2% to $1.70 billion in the quarter; long-distance operating revenue fell 7.9% to $476 million; data and Internet services operating revenue rose 3.2% to $996 million, and wireless operating revenue fell 15% to $152 million.

"While the industry environment is still challenging, we are seeing signs of stabilization in our business," Qwest said in a release. "We continue to focus on growing profitably and pursuing opportunities to improve our financial strength."

Qwest also offered to redeem $2.25 billion of bonds, including $625 million of notes maturing from 2005 to 2007, $1.3 billion of notes maturing 2008 through 2011 and $325 million of notes maturing 2014 through 2031.