Qwest Performance Beats Wall Street Journal Expectation

Qwest Communication’s stock increased Tuesday, after the Denver-based telecom company posted better-than-expected fourth-quarter earnings and cost-cutting strategies. Resulting from the weak economic state, Qwest eliminated 1,700 jobs during the fourth quarter. Investors reacted positively, leading to a 2.4% increase in stock prices. With a late-morning high of $3.64 per share, Qwest stock closed at $3.45 per share on Tuesday.

Meanwhile other telecom stocks, those of AT&T, Sprint Nextel and Verizon, slipped 5.1%, 11% and 4.4% respectively.

Quest, the main local carrier in 14 Western states, reported a third-quarter profit of $185 million, equivalent to 11 cents per share for 2008. On Tuesday, Qwest reported earnings of 11 cents per share during the fourth quarter as well. The company’s stock beat Wall Street Journal’s prediction by 1 cent per share, leading to the surge in stock prices.

The telecom company also posted a fourth-quarter revenue of $3.3 billion, beating analysts’ prediction of $3.31 billion.

"We were happy with our results -- we have been focused on profitable growth," The Qwest CEO, Ed Mueller, told TheStreet.com. "We're happy with our execution." Mueller attributed results to the company’s three core businesses. For example, Qwest’s Business Markets division experienced a margin of 37.5%, an increase from 150 basis points.

Qwest’s latest cost-cutting plan will prevent the addition of cash contributions to its pension plan for 2009. Seeking to offset consumer’s declining demand for landline telephone services, Qwest hopes to sell more data and Internet services.

Qwest stated it will maintain "a cautious view on its outlook" for 2009. The Denver-based telecom firm expects to generate from $1.4 billion to $1.5 billion in adjusted free cash flow. Depending on the health of the economy, capital spending is predicted to be $1.8 billion.