Qwest Communications, the local phone-service provider in Minnesota and 13 other U.S. states, posted first-quarter profit that beat analysts' estimates after cutting jobs to make up for customer losses. The stock gained.
Earnings, excluding severance costs, were 13 cents a share, exceeding the average projection of 8 cents in a Bloomberg survey. Sales fell 6.6 percent to $3.17 billion, Qwest said Wednesday.
Qwest cut 10 percent of its workforce in the past 12 months and scaled back spending on its network to shore up cash as customers abandoned home phone lines in favor of wireless handsets. The Denver-based company added Internet and TV subscribers, compensating for declining phone-service sales.
"This is not a growth story, this is a cash-flow story," said Todd Rosenbluth, an analyst at Standard & Poor's in New York. "There's been fear that the cash-flow situation would deteriorate, and the dividend would, down the road, be at risk, and this helps."
Qwest shares rose 11 cents, or 3.1 percent, to close Wednesday at $3.68.
Net income rose to $206 million, or 12 cents a share, from $150 million, or 8 cents, a year earlier. The company reiterated its forecast for earnings, before interest, taxes, depreciation and amortization, of $4.2 billion to $4.4 billion for the year.
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