Qwest's Net Jumps on Tax Benefit; Operating Revenues Disappoint

Oct.30.07 | About: CenturyLink, Inc. (CTL)

Qwest Communications reported a surge in third-quarter earnings to $2.07 billion, or $1.08/share, compared to $194M ($0.09/share) last year, boosted by a $2.15B tax benefit -- Qwest also took a charge of $353M for a shareholder litigation settlement. Operating revenue declined 1.5% to $3.43B, falling short of analysts' average estimate of $3.49B. "The settlement of remaining opt-out shareholder litigation matters is a significant step in putting uncertainties behind us, and the accounting recognition of the value of tax assets indicates confidence in our future profitability," CEO Edward A. Mueller commented in a statement. (Earnings call transcript later today). Data, internet and video services revenue increased 10% y/y to $1.3B. Qwest gained 110,000 high-speed internet subscribers, a sharp drop from last year's 175,000 adds. Qwest said year-to-date capex of $1.16B is about 5% off last year's level, due to the decline in housing starts, but it still expects redeployment of capital for growth projects and fiber to the node to result in 2007 capex equating approximately to 2006. Shares of Qwest lost 1% to $8.18 on Monday and were last down 2.25% to $8.00 in pre-market trading.

Seeking Alpha's news briefs are combined into a pre-market summary called Wall Street Breakfast. Get Wall Street Breakfast by email -- it's free and takes only seconds to sign up.