The Association of U S West Retirees



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 it."

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 November 2005.

The Denver 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.

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