RealTime IT News

Qwest's Revenues Fall Flat in Q4

Qwest Communications , the Baby Bell serving much of the Rocky Mountain region and surrounding states, took a $750 million hit in the fourth quarter as executives continued with their ambitious restructuring plan, officials announced Tuesday.

Officials don't expect their fortunes to reverse in the first quarter of 2002, either, as seasonality issues tend to indicate weaker sales in the beginning of the new year.

The incumbent local exchange carrier (ILEC) reported net losses of $516 million in the fourth quarter of 2001, more than tripling its loss from Q4 2000, which was $116 million. Exacerbating the losses were flat revenues, which dropped in the fourth quarter to $4.7 billion, down $314 million from last year.

Joe Nacchio, Qwest chairman and chief executive officer, said 2002 will be a transition year, as they get rid of non-essential businesses and focus on their profitable ones.

"Our overall performance continues to be impacted by economic conditions nationally and in our local service region, but we are encouraged with the progress made in some of our key growth areas, including global enterprise, DSL and wireless," he said.

Ironically, one of its more successful divisions, digital subscriber line (DSL) service, won't be there for long. In April 2001, Qwest announced it would shut down its dial up and DSL provider arm, Qwest.net, and encourage a migration to the Microsoft Network .

Qwest ended the year with 448,000 DSL customers, a net add coupled by price increases that boosted their DSL revenues by 85 percent in the fourth quarter. The Bell plans to add another 200,000-250,000 DSL customers in 2002.

Another successful division, it's wireless digital phone service, helped troubled Qwest with its bottom line, garnering a total of 1.11 million customers for $211 million in 2001.

Qwest will spend much of the first half of 2002 with its restructuring plan, an expected event officials reported by in December 2001. In their gloomy projections for 2002, executives announced 7,000 employees would lose their jobs by mid-year.

Officials said they have started that process, a process that will eliminate roughly 80 percent of its customers support staff and 20 percent of administrative/back office employees.

Of Qwest's $754 million charge announced Tuesday, $350 million went towards severance packages for those affected employees. Another $240 million went to abandoned real estate and another $175 million to what officials call "asset impairments," a kind of grab bag generalization that can include equipment markdowns and other depreciations.