Qwest Q2 profit heads south, along with outlook

On the heels of having its four-market forbearance petition rejected, Qwest Communications reported a 24 percent decline in profit to $188 million as part of its second quarter earnings summation. Revenue was down about 2 percent overall to $3.38 billion, and because the Federal Communications Commission rejected Qwest's request for forbearance from access charge regulation, the telco will not be able to realize more revenue through higher wholesale pricing.

The telco adjusted its outlook lower for the rest of the year, saying that revenue growth will be only about 2.5 percent. Qwest also reported that access lines declined about 8 percent to 12.2 million. Positive news included an addition of 32,000 satellite TV subscribers via Qwest's partnership with DirecTV, growth of about 9 percent in Internet and video revenue, and a rise of about 14 percent overall in broadband subscribers.

All in all, this particular earnings report could not have been how Qwest CEO Edward Mueller had hoped to celebrate his first anniversary as chief. Looking back at the past year, Mueller has made a few changes here and there, and a couple of major decisions--most notably Qwest's icing of Sprint as its wireless partner (though that wasn't really a hard decision), and the company's $300 million commitment to FTTN, but not for video. Is the company any better off than it was one year ago?

For more:
- see this report at The Wall Street Journal