Qwest Q1 Net Nearly Triples, Beats Street Despite Sales Miss

Qwest Communications reported Q1 net income jumped more than 170% to $240 million, or $0.12/share, beating the Street's consensus estimate of $0.09/share. Revenues however, fell by less than 1% to $3.45b, short of analysts' average estimate of $3.49b. Qwest said data revenue rose 11% to $1.2b, as high-speed Internet subscribers increased 37% to 2.3m. Voice and long-distance revenues declined however, as did total market access lines, but the impact was lessened by a 6% increase in average revenue per unit to $52. During the quarter, Qwest was selected as a participant in the largest federal telecommunications contract ever announced: $20b - $48b over the next 10 years. Qwest reaffirmed its previous guidance for revenue, EBITDA, capex and free cash flow. Shares of Qwest lost 0.22% to $8.88 during normal trading Monday. In pre-market activity Qwest last traded at $9.06 (+2%), on thin volume of under 27,000 shares. It is trading at its highest levels since March '02.

Sources: Press release [pdf], Bloomberg
Commentary: Unusually High Institutional Ownership Stocks • AT&T, Qwest and Verizon, But Not Sprint, to Compete for Big Govt. Contracts • Qwest Earnings Conference Call Transcript (later today)
Stocks/ETFs to watch: Qwest Communications International (Q). Competitors: AT&T (T), Sprint Nextel (S), Verizon Communications (VZ). ETFs: iShares Dow Jones U.S. Telecom Sector Index (IYZ), Telecom HOLDRS (TTH), Vanguard Telecom Services (VOX)

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