DENVER-
Qwest Communications International Inc. said Tuesday its first-quarter profit nearly tripled as it cut expenses while demand grew for Internet and data services, reflecting a shift away from traditional phone service.
Qwest also said revenue dipped 0.9 percent, citing a 7 percent drop in access lines and a $40 million charge related to securities litigation, among other expenses.
The company’s stock rose 2.5 percent in afternoon trading on the news.
Dick Notebaert, who heads the Denver-based telecommunications provider, said he was pleased with the results, noting data and Internet services represented at least 35 percent of overall operating revenue.
He also pointed out the penetration for bundled products of phone, television and Internet services was 59 percent of its total customer base in the first quarter, up from 53 percent a year ago.
For the January to March quarter, Qwest’s net income totaled $240 million, or 12 cents a share, compared with $88 million, or 5 cents per share, in the first quarter of 2006. Revenue fell 1 percent to $3.45 billion from the year-earlier total of $3.48 billion.
Analysts polled by Thomson Financial forecast a profit of 9 cents per share on revenue of $3.49 billion.
Combined data, Internet and video revenue increased 11 percent over the year-ago quarter. The mass markets segment showed strength but revenue was flat in the wholesale divisions. Operating expenses declined 6 percent.
In a research note, Bank of America analyst David Barden called the results a “barbell quarter,” noting lower revenue and access line losses were offset by reduced expenses which led to stronger earnings per share.
Qwest, the primary telephone service provider in 14 mostly Western states, continued to shed jobs as its work force totaled 38,011 as of March 31, down 3 percent from 39,127 at the end of the 2006 first quarter.
Like others in the telecommunications industry, Qwest is channeling its efforts into selling packages of services. It offers Internet via DSL lines and has partnerships to resell DirecTV’s satellite television service and Sprint Nextel Corp.’s wireless phone service.
Access lines for traditional phone service declined 6.8 percent to 13.6 million in the first quarter. The average subscriber revenue per unit rose to $52 from $49 in the 2006 first quarter.
Notebaert declined to provide details on the $40 million litigation charge, such as whether any of the money went to pay legal fees for former Qwest CEO Joe Nacchio, who was convicted last month of insider trading.
In addition to that case, Qwest also is involved in shareholder lawsuits and the Securities and Exchange Commission separately is suing several former Qwest executives on fraud charges related to an accounting scandal.
Notebaert took over in June 2002 as Nacchio resigned under pressure amid the scandal that forced Qwest to restate $2.2 billion in revenue.
Qwest stock rose 22 cents, or 2.5 percent, to $9.10 a share in afternoon trading on the New York Stock Exchange.
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