Rebounds to Post Profit On Aggressive Cost Reductions
By Roger Cheng
The Wall Street Journal
Wednesday, November 1, 2006
Qwest Communications International Inc. rebounded to a
third-quarter profit as aggressive cost-cutting plans continued
to pay off.
The turnaround for the Denver telecommunications company was
attributed to Qwest's reduction in facilities costs, which Chief
Executive Dick Notebaert said represents the largest opportunity
for savings. "We're doing it at a controlled and disciplined
pace," he said.
Mr. Notebaert said he sees improvement over the long term driven
by lower costs, and also by raising average revenue per user to
the industry average, which represents a $600 million
The company has come a long way from a year ago, when it lost a
bitter fight to acquire MCI Inc. to
Verizon Communications Inc. With continued losses at the
time, many analysts doubted its ability to continue operating.
Like the rest of the former Baby Bells, it competes against
cable companies, which offer rival Internet-based telephone
services. Unlike its peers, it has no stake in the fast-growing
Qwest has shored up that gap by reselling
Sprint Nextel Corp. cellular service as part of a bundle
with local or Internet phone service, digital subscriber line,
and satellite television with
DirecTV Group Inc.
Qwest posted net income of $194 million, or nine cents a share,
compared with a year-earlier net loss of $144 million, or eight
cents a share. The latest period included a gain of $92 million
from a tax-sharing settlement and a severance charge of $43
million. Revenue ticked lower to $3.49 billion from $3.5
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