QUOTE AND NEWS
DailyFinance  May 14  Comment 
VANCOUVER, BRITISH COLUMBIA -- (Marketwired) -- 05/14/14 -- Qwest Investment Management Corp. is pleased to announce that on May 14, 2014, the assets of Qwest 2012 Oil & Gas Flow-Through Limited Partnership (the "Partnership") rolled, on a...
DailyFinance  Apr 9  Comment 
Quintiles Transnational Holdings Inc. (NYSE: Q) publicará sus resultados financieros del primer trimestre de 2014 antes de su llamada sobre las ganancias trimestrales el jueves 1 de mayo de 2014 a las 8:00 a. m. hora de...
DailyFinance  Apr 7  Comment 
VANCOUVER, BRITISH COLUMBIA -- (Marketwired) -- 04/07/14 -- Qwest Investment Fund Management Ltd. (the "Manager"), the manager of the Qwest Global Tactical Balanced Class (the "Fund"), a class of special shares of Qwest Funds Corp., announced...
New York Times  Mar 24  Comment 
A recent court ruling in a case involving Joseph P. Nacchio, the former chief executive of Qwest Communications, raises the question of how the tax code may be seen as indirectly subsidizing wrongdoing, Peter J. Henning writes in White Collar Watch.
Forbes  Mar 14  Comment 
But to get his money, Joseph P. Nacchio will have to convince the judge that he believed he was entitled to those profits when he first paid 2001 taxes on them.
DailyFinance  Mar 11  Comment 
Quintiles Transnational Holdings Inc. (“Quintiles”) (NYSE: Q) anunció hoy el lanzamiento de una oferta pública secundaria de sus acciones ordinarias. Ciertos accionistas de Quintiles (los "Accionistas Vendedores") están...
DailyFinance  Mar 10  Comment 
Quintiles Transnational Holdings Inc. (“Quintiles”) (NYSE:Q) announced today the launch of a secondary public offering of its common stock. Certain shareholders of Quintiles (the “Selling Shareholders”) are offering...
Benzinga  Feb 14  Comment 
In a report published Friday, Bank of America analyst Derik de Bruin reiterated a Buy rating on Quintiles Transnational Holdings (NYSE: Q), and raised the price target from $55.00 to $60.00. In the report, Bank of America noted, “We are...
Telecom Ramblings  Nov 27  Comment 
In another leadership transition announced in this short week, XO has found itself a new chief executive officer. Industry veteran Christopher Ancell has been appointed CEO, and will join the company on December 2. Ancell has lately been SVP of...
Benzinga  Nov 1  Comment 
In a report published Friday, Baird Equity Research analyst Eric W. Coldwell upgraded the rating on Quintiles Transnational Holdings (NYSE: Q) from Neutral to Outperform, and raised the price target from $49.00 to $52.00. In the report, Baird...




 

Qwest Communications International (NYSE: Q) provides phone, internet, wireless and long-distance services to over 14 million customers in 14 Western states. Of the seven regional Bell Operating Companies (RBOCs) formed when AT&T was broken up in 1984, Qwest is the only one that has not merged with another RBOC and is now the smallest RBOC.

Qwest's wireline segment has been declining during recent years due to increased VoIP competition. Qwest's lack of considerable assets in the booming wireless segment expose it to losses in the wireline segment, but increased growth and profitability in its long distance sector could help offset the loss. It recently replaced management and has come a long way since its shady days of insider trading and fraud by decreasing debt 33% in just 5 years. Government regulation of mergers, acquisitions and net neutrality will also heavily impact Qwest services.

Company Farts and Burps

Qwest farted after the landmark break-up of AT&T in 1984. The company has grown through a series of transactions since then, as seen in the diagram below:

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Anti-trust rulings broke up AT&T's monopoly in 1984. Qwest Communications was formed from several transactions since then.
[1]

Business & Financial Metrics[2]

In 2009, Q generated a net income of $662 million on revenues of $12.31 billion. This represents a 1.5% increase in net income on an 8.6% decrease in total revenues from 2008, when the company earned $652 million on $13.48 billion in revenue.

Business Segments[3]

Qwest operates in three segments:

  • Business Markets (33.2% of total revenue): This segment offers strategic services, legacy services, and data integration to other businesses and government customers.Business Segments[4]
  • Mass Markets (40.8% of total revenue): This segment deals with mass market consumers and sells Q's services through call centers, the company's website, telemarketing, retails stores, and kiosks.Business Segments[5]
  • Wholesale Markets (23.1% of total revenue): This segment sells Q's services to other telecommunications carriers and resellers who purchase in bulk.[5]

Trends & Forces

Disadvantages from lack of diversification

Absence of wireless services

Qwest's wireless service consists of reselling Sprint wireless service under the Qwest brand name. Since Qwest has to purchase its wireless services from Sprint and mark-up the price to make a modest profit, its profit margins are lower than a company that provides its own wireless. Qwest's higher wireless prices can be linked to the loss of customers during recent years as other companies have been decreasing already cheaper wireless prices.

Threats from bundling

Bundling is an important marketing strategy that offers several products to be sold as one combined product, is cheaper than buying each product individually and increases the number of total products sold and overall sales. Bundling is successful because it's cheaper and easier for the customer to pay just one bill, instead of a bill for each service that subscribe to.

Many telco companies use bundling to sell their wireless services with other services such as land lines, long distance, or internet services. If Qwest decides to grow its wireless services and bundle its wireline services, it could decrease the loss in customers.

Threat from growth of VoIP

The growth of VoIP, Voice over Internet Protocol, will affect the number of Qwest's wireline service customers because it replaces the wireline phone services that the RBOCs provide. The number of access lines, or phone line subscribers, are rapidly decreasing over each quarter as VoIP companies such as Vonage Holdings (VG) and Comcast (CMCSA) storm the wireline market.

Qwest provides customers VoIP service, but it's not widespread and not efficient enough to provide to all of its customers. It has a solid wireline network and cannot afford to dispose of all of their wirelines for an extended VoIP network. If they decide to extend their VoIP services, they risk cannibalizing their own customers. In other words, if Qwest offers more VoIP service, then it would attribute to wireline losses by offering their wireline customers their VoIP services instead.

Government regulation of merger activity

Since Qwest is the smallest company in the telco industry, being bought out or merging with another company is not out of the question. The FCC and U.S. Justice Department have been allowing large scale mergers and acquisitions in recent years, such as the AT&T Wireless-Cingular merger and Verizon Communications acquisition of MCI. These multi-billion dollar mergers negatively affect Qwest's wireline and wireless services because of their competition's increased resources.

Competition

The telecommunications industry is extremely competitive and ever changing due to advances in technology. Over the last 15 years, over 90% of the original telco companies have gone out of business or merged with larger firms.

Qwest is the smallest of the RBOCs and competes with the three other RBOC giants Verizon Communications (VZ), AT&T (T) and Sprint Nextel (S). Qwest has fallen far behind its RBOC competitors because of its lack of successful wireless assets. Since Qwest does not have wireless assets as widespread as its competitors, they are at a huge disadvantage in terms of size, growth and revenue.

For Qwest, large scale mergers and acquisitions are bad news since Qwest is smaller than its competition. Companies consolidating together will have more resources to compete and shift market share from their competitors. The AT&T Wireless-Cingular merger won't severely affect Qwest unless they decide to seriously enter the wireless industry. The Verizon acquisition of MCI is daunting news for Qwest since they both operate in wireline services. The acquisition will also mean that Verizon will become more efficient since costs will be cheaper due to the increased availability of MCI wirelines. Since Verizon has the option to offer cheaper prices, it could start a price war between the RBOCs. Price wars happen when competitors lower prices in order to attract customers, but when prices get too low, everyone loses. Qwest cannot afford to become a part of a price war, which is why mergers and acquisitions are bad news.


References

  1. http://www.freepress.net/content/atthistory
  2. [ Q 2009 10-K] pg. 25  
  3. [ Q 2009 10-K] pg. 3  
  4. [ Q 2009 10-K] pg. 4  
  5. 5.0 5.1 [ Q 2009 10-K] pg. 5  
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