Qwest Sort of Guides Up

The company will post a profit in the first quarter, but only after an asset-sale gain.
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Riding high after this weekend's gains in the

MCI

(MCIP)

showdown,

Qwest

(Q)

said it would post a first-quarter profit after an asset-sale gain.

The struggling Denver telco said revenue would be flat but that cost-cutting would help it to a profit for the first quarter -- after the company counts the proceeds of a $250 million wireless asset sale to

Verizon

(VZ) - Get Report

. Of course, Verizon is Qwest's rival in the face-off over Ashburn, Va., telco MCI, which on Saturday declared Qwest's latest offer superior to one it accepted earlier from Verizon.

Analysts and investors continue to question Qwest's chances, though, pointing to its heavy debt load, weak operating performance and lack of a wireless business. Indeed, it was a group of wireless assets that Qwest sold to Verizon to garner the coming quarterly profit. The U.S. wireless business, meanwhile, is where all the big phone companies have been looking to gather growth and offset the decline of their land-line businesses.

Meanwhile, Qwest was left rattling off some rather convoluted numbers.

"The company expects to report that it continued to hold revenues flat for the fourth consecutive quarter and to report revenue less cost of sales and SG&A in excess of consensus expectations and in the range of $970 to $990 million," Qwest said. "In addition, Qwest expects cash generated from operations for the quarter will exceed capital expenditures, reflecting focused operating activities and reduced capital expenditures offset by the payment of employee bonuses and the timing of certain payroll tax payments. The company continues to expect an improvement this year in cash generated from operations less capital expenditures compared with 2004 before one-time payments."

Qwest, which expects to post quarterly numbers May 3, closed Friday at $3.55.