Qwest Restates Earnings For Fourth TimeFeb 12, 2003 | FT.COM
Qwest Communications, the US telecommunications carrier that is the focus of two federal accounting investigations, issued its fourth restatement of earnings for 2000 and 2001, decreasing revenues by $2.2bn for the two years.
Including past restatements, Qwest's 2001 revenue is $18.4bn, down from the $19.7bn originally stated and revenue for 2000 is $15.7bn, down from $16.6bn.
Denver-based Qwest, which is being investigated by the Securities and Exchange Commission as well as the Department of Justice, said the latest revenue adjustments were due to wrongly booked equipment sales, billing errors and incorrect application of accounting principles.
In one case, Qwest said it incorrectly recognised upfront $148m in revenue for the sale of equipment to internet company KMC Telecom Holdings rather than spreading the cash out over time.
Qwest, which is the major local telephone carrier in 14 states from Minnesota to Washington, has about $25bn in debt and has been driven to the brink of bankruptcy by a series of financial and management scandals.
The latest financial restatement, announced late on Tuesday, came almost a year after US regulators began investigating whether Qwest and other telecoms carriers had artificially inflated earnings to meet Wall Street expectations by booking swaps of network capacity and incorrectly recording sales.
Shares of Qwest were down 5 per cent at $3.96 during afternoon trade in New York on Wednesday.
The company is due to report fourth-quarter earnings next Wednesday and provide forecasts for 2003. However the outlook is bleak as the telecoms industry continues to be buffeted by weak demand and substitution of wireless service for traditional phone lines.
Qwest has cut thousands of jobs and sold its QwestDex directory business for $7.05bn to reduce expenses. The shake-up included the removal of Joseph Nacchio as Qwest's chairman and the sacking of Arthur Andersen as the company's auditor.