Qwest ( Q) shares dropped 8% after the telco's core phone business took another beating.The Denver phone giant posted third-quarter net income of $2 billion, or $1.08 a share, which included a $2.1 billion tax benefit and a charge of $353 million for legal settlements. Excluding these one time items, Qwest's adjusted profit was about 14 cents a share. Analysts were looking for a pro forma profit of 15 cents, according to Yahoo! Finance. Sales in the quarter ended last month were $3.43 billion, down from $3.48 billion in the second quarter and down from the $3.46 billion level a year ago. Analysts expected revenue of $3.49 billion. Weak areas for Qwest included sales to businesses and a drop in wholesale orders. The company also saw more alarming declines in its core business as total phone lines fell 7.2% as customers flee to cable and wireless offerings as well as a slowdown in housing starts in the West, says Qwest. "Through exceptional customer service, profitable growth and capital and cost discipline, I am confident that Qwest is well-positioned to build on a foundation of ongoing value creation," CEO Ed Mueller said in a press release. All the big telcos are losing landline customers, but rivals Sprint ( S), Verizon ( VZ) and AT&T ( T) are more cushioned than is Qwest because of their big in-house wireless businesses, which Qwest notably lacks.