Qwest cuts guidance, 7000 jobs

While all service providers have slashed their capital spending, some such as Qwest Communications seem to be suffering more than their competitors. Today, the company revealed its guidance for the forth quarter and the year 2001 would be lower than anticipated due to continued softness in the market.

After recently slashing 4000 jobs, the Bell company announced the layoff of another 7,000 today, which equates to 11% of its entire workforce. The end objective is to reduce headcount to 55,000 by mid-2002.

“I will go to church twice as much and pray for a recovery,” said chairman and CEO Joe Nacchio.

Nacchio reiterated sentiments expressed in the company’s third-quarter call that his major mistake was not reacting sooner to the changing economy.

Qwest expects reported revenue of approximately $4.8 billion and earnings before interest, taxes, depreciation and amortization (EBITDA) of about $1.7 billion. Qwest estimates reported revenue of $19.8 billion and EBITDA of $7.45 billion for 2001. A reported net loss per share for the year 2001 is expected in the range of $2.30 to $2.38 and normalized earnings per share of $0.07 to $0.08.

Although Qwest has already slashed capital spending, it plans to do more. The company revised its capital expenditures from $5.5 billion to a range of $4.2 billion to $4.3 billion.

Throughout all the ugliness, Nacchio maintained the company will be free cash flow positive in the second quarter of 2002 and thereafter.

Qwest will take a $400 to $600 million charge associated with the layoffs and some asset write-downs.