Qwest results boosted by profit on directory sale

Qwest Communications today reported a $2.7 billion profit during the fourth quarter, largely on the sale of a portion of its directory business.

Excluding the sale, the company’s showed a smaller-than-expected loss and a significant revenue decline for Q4.

For the quarter ending December 31, the company posted normalized operating revenues of $3.7 billion. Normalized net loss was $35 million, or 2 cents a share, far better than the 11-cent mean analyst estimate predicted by First Call. Factoring in one-time items, including the first phase of its directory business sale, Qwest’s net income for Q4 was $2.7 billion, or $1.61 per share.

For the full year, the company reported operating revenues of $15.5 billion, down 7.5% from 2003. Including one-time items, Qwest’s 2002 net loss was $35.9 billion, or $21.35 per share.

Despite the decline in revenues, Qwest CEO Dick Notebaert said he is seeing “encouraging” signs of stability in the company’s consumer segment, including lower churn for DSL and slower access line declines. Access line loss fell from 170,000 in Q3 to 163,000 in Q4.

There are also hint of stabilization in the company’s enterprise business, he said.

“Our sales cycles are shortening and we have had some important wins. The pricing environment has, by and large, become more rational and stable. The rate of decline in business lines appears to have stabilized and the demand for data and IP services has remained steady,” said Notebaert.

For 2003 the company said it is expecting access line loss to be slightly lower than in 2002. The rate of revenue decline is expected to be comparable or slightly better than 2002, and capital expenditures are projected at 15% to 20% of revenue.