Qwest Communications International Inc. (NYSE: Q) raised its revenue and earnings targets for 2000 and 2001 Thursday as it continues the integration of US West. It also announced 12,800 layoffs, the sale of $1 billion in non-strategic assets and the launch of its Digital Media subsidiary.
Shares fell 0.63 to 50.875 Thursday morning following the news.
The company is raising its 2000 revenue target from $18.5 billion to a range of $18.8 billion to $19.1 billion, and reiterating its EBITDA (earnings before interest, taxes, depreciation and amortization) target of $7.4 billion, said Qwest Chairman and CEO Joseph P. Nacchio in a release.
Qwest also raised 2001 targets for revenue from $21.0 billion to a range of $21.3 billion to $21.7 billion and for EBITDA from $8.5 billion to a range of $8.5 to $8.7 billion. Nacchio also reaffirmed the five-year compounded annual growth targets of 15-17 percent for revenue and 20 percent for EBITDA. Qwest is on track to exceed synergy targets of $12.0 billion in revenue, generating EBITDA of $4.0 billion to $4.2 billion, and $4.3 billion to $4.5 billion of cost savings through 2005.
As part of its realignment, Qwest plans to generate about $1.0 billion from the sale of investments in 15 companies -- including a portion of Global Crossing (Nasdaq: GBLX) it obtained through the acquisition of US West. Qwest is realigning to focus on management of its Internet access and applications, communications services, wireless, DSL and video products. Qwest also plans to raise capital budgets to $9.0 billion in 2000 and to $9.5 billion in 2001 to improve service and invest in the core business; double the Web hosting capacity of its CyberCenters(SM); and double the customer base for its wireless and digital subscriber line (DSL) businesses.
The company also said that over the next 12 months it will complete the previously announced sale of 570,000 access lines, generating $1.75 billion.
The company also plans to chop 4,500 jobs by December 31, and another 6,500 jobs by the end of 2001. Additionally, 1,800 contractor positions will be eliminated by the end of next year. The job reductions come as Qwest streamlines its business, slicing overlapping staff functions.
Qwest continues to focus on obtaining section 271 approval to re-enter the long-distance, and will also improve basic residential service.
In a seperate announcement Thursday, the company launched Qwest Digital Media, a subsidiary providing multimedia services via broadband Internet distribution. Qwest has hired David Woodrow, a former Cox Communications Inc. executive, as CEO.