Qwest Communications posted a 49.5 percent drop in net income due to ongoing declines in its residential landline segment and announced larger-than-predicted job cuts.
In late October, the company said it would cut 1,200 jobs after steep declines in earnings. Today, the company announced it had cut 1,700 jobs, or 11 percent of its workforce, and said it would halt cash contributions to pension plans in the upcoming year.
The company also moved 180,000 wireless subscribers to Verizon Wireless. Qwest began to transition its stand-alone wireless customers to Verizon last year.
The company posted net income of $185 million for the fourth quarter, or 11 cents per share, compared to $366 million, or 20 cents per share, in the same period last year.
The company has attempted to offset ongoing declines in residential landlines through building upon the broadband segment and cutting costs, but expansion efforts are going at a cautious pace as the company evaluates ongoing economic turmoil, says Michael Suby, director of research for Frost & Sullivan.
“[Qwest] is going to be depending on bringing bandwidth-dependent services to their consumer market, but they currently only have 1.9 million households passed with their fiber to the node and they only plan on adding 1.5 million in 2009,” he says.
Suby expects 2009 to be a challenging year for the company as residential landline subscribers continue to decline. “Like their peers in the residential landline business, it’s unfortunately a non-reversing trend,” he says.
Qwest posted fourth-quarter revenue of $3.3 billion, a 3 percent decline from $3.4 billion last year. For the full year, net income was $681 million, or 39 cents per share, compared with $2.9 billion, or $1.52 share, in 2007.
The company posted revenue of $13.5 billion for the full year, a 2 percent decline from last year. Full-year 2008 operating revenue of $13.5 billion declined 2 percent from the full-year 2007.
