Telecom & Wireless

Qwest's Mixed Results (Q)

Qwest Communications (NYSE:Q) has posted earnings at $1.08 EPS diluted and $1.15 basic EPS on revenues of $3.434 Billion.  While the earnings number sounds huge for an $8.00 stock, this earnings number is not comparable on the surface because it includes the recognition of a $2.1 Billion tax benefit and $353 million in charges for litigation. This revenue number is also a slight drop from the $3.49 Billion for the same period the year before.

Unfortunately, the per share figures were not noted so the apples to apples data is up to independent calculations.

Qwest also added 111,000 high-speed Internet subscribers to raise its total to roughly 2.52 million.  Qwest added 62,000 net DIRECTV subscribers in the quarter. Qwest has      634,000 video subscribers through Qwest ChoiceTV and the DIRECTV      partnership up from a total of 350,000 subscribers a year ago. 2007 Cap-ex is expected to be roughly flat to 2006 levels and there hasn’t been any real change to free cash flow for the year.  Adjusted EBITDA is expected to be roughly a $250 million improvement to last year’s levels.

Shares of Qwest are down a little over 2% at $7.97 on over 2 million shares after its conference call started.  Its 52-week trading range is $7.41 to $10.45.

Until the final breakdown of numbers is clarified or until some more formal forward guidance is shown, traders may want to consider any verdict as pending or unresolved.

Jon C. Ogg
October 30, 2007

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