profits bring choices
Analysts say Qwest's second-quarter earnings may lead to
buybacks or rewards for investors.
By Beth Potter, Staff Writer
Tuesday, August 1, 2006
Qwest could announce a stock buyback, a reinstatement of
dividends or additional capital spending in its
second-quarter earnings call today, two analysts said.
"It's going to be some kind of equity-friendly move in the
next month or so," said John Hodulik, a telecommunication
analyst who follows Qwest at UBS, a banking/financial firm
in New York. "It's time to reward the equity holders for
Qwest spokesman Bob Toevs said Monday the company would have
no comment until its earnings report.
The Denver-based phone company eliminated its dividend in
Qwest's stock price has risen 19 percent in the last
quarter, in part because investors expect a future dividend,
said David Bowden, a telecommunication analyst at Bank of
America in New York.
"We believe the sharp stock run-up in the second quarter
reflects ... anticipation of coming dividends/buybacks,"
Bowden said in a Monday report about Qwest.
Hodulik said UBS predicts Qwest will have $1.5 billion in
cash on hand in 2006, and a dividend, a stock buyback and
increased capital spending are all options.
Qwest spent about $1.5 billion in capital improvements in
2005 and plans to spend a similar amount this year,
spokesman Vince Hancock said last week. The company now can
offer broadband Internet service fast enough to show TV
programs to 78 percent of its customers, up from about 67
percent in 2004.
Analysts expect quarterly earnings of 5 cents per share on
sales of $3.5 billion, according to Thomson Financial, a
national research firm.
Qwest announced its first profit in the first quarter of
this year after being forced to restate $2.5 billion in net
income and revenue in 2001 and 2002 following allegations of
Company shares have more than doubled in the last year from
$3.67 to close at $7.99 Monday.
Staff writer Beth Potter
can be reached at 303-820-1503 or