Qwest fourth quarter earnings top $5 billion

(Telephony) Qwest Communications today announced that fourth quarter 2000 earnings totaled $5.02 billion, an increase of roughly 10% over fourth quarter 1999. The results beat analyst expectations for the 15th consecutive quarter.

The revenue growth was led by the company’s wireless services sector, which saw fourth quarter revenues grow by more than 90%, while Internet and data-services revenue grew by nearly 40%. Internet and data services represented more than 23% of Qwest’s total revenues for the quarter.

Qwest also announced that it had won more than $600 million in new contracted sales in business markets during the quarter.

For fiscal year 2000, overall revenue grew by more than 14% to $19 billion. The number of wireless customers grew to more than 805,000, a better than 73% increase. In addition, DSL customers more than doubled to 255,000.

Qwest also reported that it had met its target of reducing its workforce by 4,500 by the end of the year, and that it had reduced delayed local service orders to 850 at year-end, a six-year low.

The one blight on the generally positive earnings report concerned the company’s switched-access services business. Revenues topped out at $267 million which was 25.6% lower than revenues earned in fourth quarter 1999. Revenues for this sector were off 13.6 for the fiscal year, reaching approximately $1.5 billion.

Despite any uncertainties that may exist concerning the economy, the company is well positioned for the future, said Joseph P. Nacchio, chairman and CEO. He specifically pointed to the company’s progress in the CLEC and DSL markets.

“If I measure by what point should we have been at by the end of 2000, we are not only physically and operationally ahead of plan, but our revenue and people performance thus far is ahead of plan,” Nacchio said.

“We will have 25 DSL cities complete by mid-June 2001 and 25 CLEC cities complete by end of year 2001. So we’re well on our way to putting in the operating platform which will account for a large percent of our growth in revenues in 2002-2004.”

Nacchio also suggested that an unexpected moderation in long-distance pricing would offset any problems created by an economic slowdown.

“Traditionally, aggressive new price promotions are launched in the fourth quarter and early in the first quarter,” he explained. “But so far, we haven’t seen a single price promotion on the long-distance side of the industry.

“If we see a moderation of long-distance pricing, that will go a large way to offset any miscalculation we may make about how the economy could affect us, particularly in our local-exchange business. This is another reason I think we can hold to our projections [for 2001].”

Nacchio added that another plus for the company is the primary region it serves.

“We are still operating our local exchange business in the fastest-growing region of the country. The population growth in our 14 states is about 2.5 times the other states combined,” he said.

“I don’t expect that the economy is not slowing down at all. The only question is will it slow down enough to offset some of the natural advantages we have given our region."