Enterprise competition drives down Qwest's earnings

Qwest lost US$776 million in the second quarter of 2004, the company reported last week.

The loss, which amounted to US43 cents per diluted share, included special items, such as litigation costs. Without the special items, Qwest's per-share loss was US16 cents, US3 cents higher than analyst estimates, according to Thomson First Call.

The company said increased competition in the enterprise market contributed to the disappointing results. The carrier reported "strong momentum" in long-distance, DSL, bundles and wireless, but they were more than offset by "heightened competitive pressures" in the enterprise market and continuing access line loss.

For the same period a year ago, Qwest recorded a net loss of US$64 million, or 4 cents per share.

Revenue for the quarter was $3.4 billion, down 4.3% from the second quarter of 2003 and down 1% from the previous quarter.

Revenue for long-distance services increased 6% over last year. Data and Internet revenue increased approximately 3%, both sequentially and compared to last year, as a result of continued expansion of DSL and hosting services.

Qwest said wireless revenue increased sequentially, reversing a trend of declining revenues since the de-emphasis of stand-alone wireless service in 2002.

In the third quarter, Qwest launched its business-class voice-over-IP services in four markets. The company said it remains on track to complete the rollout of business and consumer VoIP services by year-end to all major metropolitan markets within the local service area, as well as to businesses in select out-of-market areas.

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