It was another mixed-bag quarter for Qwest Communications International
While the Baby Bell showed some signs of turning its business around with a
first-quarter profit, it also saw dropping revenue and acknowledged that it
faces an expanding Securities and Exchange Commission investigation into its
The company also didn't release a cash-flow or balance-sheet statement for
the quarter, citing a planned restatement of 2000 and 2001 results, which could
flow through 2002 into 2003.
On the positive side, Qwest did improve its digital-subscriber-line business, adding 16,000 new customers for the quarter, an improvement from the 10,000 it attracted during the fourth quarter of 2002.
CEO Dick Notebaert noted during an earnings conference call that Qwest has been able to qualify 100,000 new homes for DSL using
grooming technologies and, with a planned $75 million capital-improvements
project under way, it will add 1 million new homes and businesses to its DSL
The struggling Denver-based Baby Bell posted a first-quarter net income of
$150 million compared with the whopping $2.3 billion loss it took in the first
quarter of 2002. Revenue dwindled to $3.63 billion, a 9.4% decrease versus the
$4 billion posted in same quarter last year.
While giving no specifics, the company indicated that the SEC is expanding
its investigation into Qwest's accounting practices related to $2.2 billion in
optical-capacity swaps with other carriers during 2000 and 2001.
The expanded investigation focuses on added restatements and transactions,
according to the company.