Qwest Is Quiet on Plans, Despite Profit
By Roger Cheng
The Wall Street Journal
Wednesday, October 31, 2007
While Qwest Communications International Inc.'s third-quarter
profit rose sharply on a $2.1 billion tax gain, lack of clarity
on its strategy and silence on possible dividend plans weighed
on its shares.
Qwest climbed back to profitability last year, but analysts and
investors, who had been expecting a payout, were frustrated as
Chief Executive Ed Mueller declined to outline steps to reward
shareholders until a strategic review of the company is
completed, neither confirming nor denying whether a dividend is
in the works. Further compounding uncertainty was that the
announcement of a $300 million upgrade of the company's network
with more fiber-optic lines came with few details.
Qwest shares fell $1.12, or 14%, to $7.06 in 4 p.m. composite
trading on the New York Stock Exchange.
Mr. Mueller said the board had deferred plans to return value to
shareholders until after management has completed its strategic
review at the end of the year. Speaking to analysts in a
conference call, he acknowledged shareholders' nervousness.
"I get that the clouds are over there," he said. "I get
the uncertainty. We will continue to give news as we get
Qwest also yesterday said in a filing with the Securities and
Exchange Commission that it agreed to pay $411 million to settle
remaining securities lawsuits filed against the company.
It will make the payment by June 30 to shareholders who
contended they lost more than $1.9 billion from their
investments in Qwest stock, and who had preferred to be excluded
from an earlier consolidated class-action settlement reached in
telecommunications company, which serves 14 states, mostly in
the West, doesn't have a wireless network and has relied on cost
cuts and data and Internet services to counter the steady
decline in local-phone subscriptions. It has lost more
than a fifth of its residential customers in the past five years
and said it ended the quarter with 13 million access lines, down
7.2% from a year earlier. Overall voice-services revenue
dropped 7.1%, while revenue from data, video and Internet
services jumped 9.7% to $1.28 billion.
--Kathy Shwiff contributed to this article.
Write to Roger Cheng at