Qwest predicted Monday that its first-quarter financial results will be better than expected.
Wall Street analysts had estimated that Qwest would spin off about $935 million in cash flow, a key sign of financial health, in the first quarter of 2005.
But Qwest, which reports its first-quarter results May 3, said the number would be between $970 million and $990 million.
Qwest chief executive Richard Notebaert said in a prepared statement that Qwest’s cost-cutting efforts are “paying off and benefiting profitability.”
The improved performance should help maintain Qwest’s share price as MCI shareholders consider Qwest’s $9.75 billion cash-and-stock offer for MCI. That $30-per-share bid is $14 in cash and $16 in stock.
“Those numbers should help stabilize Qwest’s stock,” said Donna Jaegers of Denver-based Janco Partners. “MCI shareholders should be more comfortable that $14 in stock will actually be worth $14.”
Qwest’s stock closed unchanged Monday at $3.55. If its stock drops below a protective “collar” of $3.32, then MCI shareholders will be nervous about receiving less value for their Qwest stock in a Qwest-MCI merger.
Given Qwest’s desires to maintain its share price, analysts will take an extra hard look at Qwest’s numbers next week.
“Qwest can manage their costs down in the near term to make their numbers look better,” Jaegers said. “But I think these numbers are real and based on actions Notebaert has taken over the last six to nine months.”
Staff writer Ross Wehner can be reached at 303-820-1503 or rwehner@denverpost.com.
