declares buyback of stock
The intent to reacquire about 12 percent of its stock is called
"an enormous vote of confidence".
By Andy Vuong, Staff Writer
Thursday, October 5, 2006
Qwest announced plans Wednesday
to buy back up to $2 billion worth of its common stock, a move
that could boost investor confidence in the Denver-based phone
The stock repurchase, to occur over a two-year period,
represents about 12 percent of the company's market
capitalization of roughly $16.5 billion.
"Twelve percent is a significant amount of the stock," said
David Fried, principal of Los Angeles-based Fried Asset
Management and editor of buybackletter.com, which tracks
share-repurchase programs. "When companies buy back their own
stocks, it reflects an enormous vote of confidence in the stock
by those who know it best -- the company's senior executives".
After nearing bankruptcy in 2002, Qwest has regained its
financial footing, posting a profit for two consecutive
Qwest chief executive Richard Notebaert said in August that the
company was considering a stock buyback or a reinstatement of a
dividend to reward shareholders.
Notebaert said in a statement Wednesday that the buyback
"represents another key milestone for Qwest". He added that
Qwest will continue to regularly review "opportunities to
enhance shareholder returns".
Notebaert took over Qwest in June 1002. The fortune 200 company
hasn't bought back stock or issued a dividend in that time.
The stock buyback will likely mean that Moody's Investors
Service won't upgrade Qwest debt. The debt-rating agency said
in August it was considering raising Qwest's rating from B1,
which is four levels below investment grade.
Moody's analyst Dennis Saputo said then that a significant stock
repurchase or dividend "would likely forestall any rating
Qwest, the dominant local phone provider in 14 states, had $15.4
billion in debt at the end of the second quarter. The company
had roughly $1.4 billion in cash and short-term investments.
Qwest stock closed Wednesday at $8.70 a share, up 16 cents. The
buyback program was announced after markets closed.
Staff writer Andy Vuong can
be reached at 303-954-1209 or firstname.lastname@example.org