Analysts Doubtful of Qwest Communications

7:30 am on March 14, 2006 | Category: Business, Telecom Services, Corporate

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Qwest Communications is sticking with its long-term strategy of increasing revenues, reducing costs, and cutting debt, and claims that it won’t be threatened by the pending merger of BellSouth and AT&T.

But the company’s failure to merge its long distance division with MCI Inc. last year, along with its lack of a wireless network, is leaving some analysts wondering how much appeal Qwest really has on its own.

“Qwest without a wireless network is a little bit like the kid who never gets picked for a team in high school,” said Bruce Allen, who owns Denver-based Bruce G. Allen Investments. “I’m not sure what the attraction is at this point.”

Citigroup analyst, Michael Rollins recently downgraded Qwest’s stock to a “sell” rating, predicting that the company probably won’t be acquired, or have the opportunity to acquire anything else in the near future. Instead, Rollins says that it will continue struggling to build revenue on its own.

Qwest CFO, Oren Shaffer, however, says that the AT&T/BellSouth merger is actually a positive thing for his company. Shaffer says that the 40,000-employee telephone provider will be “very protective” of its 14-state market in the western US, and will continue efforts to increase revenue by investing in new products and services. He claims that this will make the company more valuable in the long term.

“I think if one were trying to position themselves to make sure they were still in the game, if you will, as the industry consolidates… you would try and make yourself as valuable as you can, and… I think we have done that,” Shaffer told an analyst conference in Florida.

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    1. Regarding the line in your article about Qwest, “Qwest CEO, Oren Shaffer, however, says that the AT&T/BellSouth merger is actually a positive thing for his company.” Oren Shaffer is NOT the CEO of Qwest; he is the CFO. Dick Notebaert is the CEO.

      Comment by Bill Arneson — March 14, 2006 #

    2. Oren Shaffer is not the CEO…..Dick Notebaert is. Oren is the CFO.

      Comment by Petah — March 14, 2006 #

    3. Thanks for spotting that. The article has been corrected.

      Comment by Jeremy — March 15, 2006 #

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