Struggling Denver telco Qwest (Q) said Monday evening that it rang up a staggering $35 billion in asset writedowns as it closed an internal review of its books.
The company said the charge would consist of $24 billion in goodwill writedowns, covering the amount the company overpaid for bubble-era acquisitions, and $10.8 billion in network asset impairments, covering the amount of gear Qwest put in the ground that no one is likely to ever use. The company, which had warned in the past that it could be forced to take a charge as large as $30 billion to write down goodwill, said it will review its balance sheet again later this year and that an additional $6 billion writedown is possible.
Qwest also said it would defer $531 million worth of optical capacity swaps recognized as revenue in 2000 and 2001. The company said the decision came as it concluded a review of its accounting for so-called
indefeasible rights of use, capacity swaps that have resulted in the reversal or deferment of $1.48 billion in revenue.
Though Qwest said it had closed the internal probe, other examinations of the company's books continue. The Justice Department and the
Securities and Exchange Commission
continue to investigate the company's accounting and business policies, and Qwest's new auditor, KPMG, hasn't yet finished combing through the financials to be restated. As a result, the company said it couldn't rule out further restatements.
Qwest shares rose 20 cents Monday to close at $3.46. The company's stock has more than tripled off its summer low, reached amid worries that the company's liquidity and accounting problems would drive it into Chapter 11. But even after the recent rally, the stock remains more than 80% off its year-ago high.