UPDATE 2-Qwest quarterly profit falls 24 percent
(Adds results details, outlook, stock activity)
NEW YORK, Aug 6 (Reuters) - Phone company Qwest Communications International Inc (Q.N) posted a 24 percent drop in second-quarter profit, hurt by tax-related costs, and lowered its revenue outlook for the year.
Shares of Qwest, which mainly serves the midwestern United States, fell more than 3 percent after it said on Wednesday that quarterly net income fell to $188 million, or 11 cents a share, from $246 million, or 13 cents per share, a year earlier.
Analysts on average had expected a profit of 10 cents a share, according to Reuters Estimates.
Revenue at Qwest, which is seen as one of the weakest of the former Bell operating companies, fell 2.3 percent to $3.38 billion. The analysts' average estimate was $3.39 billion.
Qwest said revenue in its business markets segment rose 5 percent to $1 billion, driven by a 10 percent rise in data and Internet revenue and partly offsetting declines in its traditional voice services.
Total access lines fell 8.2 percent to 12.2 million.
J.P. Morgan analyst Mike McCormick called the results "mediocre," adding that Qwest's addition of 31,000 high speed Internet subscribers was well below his forecast of 64,000. He called the company's outlook "tempered."
"Business markets remains a bright spot, though management cautiously indicated that growth in second-half 2008 should be consistent with first-half 2008 levels," he said in a note to clients.
For the full year, the company said it expected revenue to decline as much as 2.5 percent, which would fall short of analysts' forecasts of $13.5 billion.
With a vastly rural territory and without a wireless unit, Denver-based Qwest, is seen as particularly vulnerable to competition from cable operators, which in recent years have been selling voice services bundled with Internet and television.
Industry leaders AT&T Inc (T.N) and Verizon Communications Inc (VZ.N) have been investing heavily in new video services to compete with cable, but Qwest has been wary of big projects and instead has focused on trimming costs and reducing debt.
Qwest shares were down 12 cents, or 3.3 percent, at $3.47 in morning New York Stock Exchange trade. (Reporting by Franklin Paul; Editing by Derek Caney, Dave Zimmerman and Lisa Von Ahn)
