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2HRS2GO: Qwest shores investor confidence

COMMENTARY -- Of course, Qwest Communications (NYSE: Q) is doing well. Wall Street simply needed to be spoon-fed a reminder.

Qwest today issued a press release that said in so many words: "We're not going to miss like those other telecom guys."

CEO Joseph Nacchio called a conference call at noon ET to plug the dam that burst on his company this week, and it apparently worked. Shares of Qwest were up more than 7 percent in early afternoon trading, after shedding almost 8 points on Tuesday and Wednesday.

Market jitters drove CEO Joseph Nacchio to comment publicly.

"I was a bit reticent to (hold a conference call) at first because I hate to be responsive to other people's news ... (but) my people also in the last two days have essentially been inundated with phone calls; speculation has been fairly rampant," Nacchio said.

(Note to Qwest: Please put Live Webcast links above the financial reports. Otherwise the page at first glance looks like a nothing but a compilation of old news.)

Warnings from AT&T (NYSE: T), SBC Communications (NYSE: SBC), Worldcom (Nasdaq: WCOM) and Sprint (NYSE: FON) apparently put a drag on Qwest stock:

Market cliche describes it as falling in "sympathy," though "stupidity" might be a better term. Anyone paying even a sliver of attention to the telecom industry knows Qwest bears almost none of the burdens carried by older telecom companies.

"Other than perhaps a single one, and I guess that's people pointing to a slowing economy, I believe their problems are unique to themsleves and do not affect us," Nacchio said. "When they're having problems, we don't all catch pneumonia."

Granted, Nacchio's statements usually need a hype filter. But his brash enthuasiasm doesn't change the fact that Qwest really is different. The company's entire reason for existence is to provide a change from the traditional communications industry.

Unlike AT&T and Worldcom, Qwest doesn't suffer from a declining consumer long-distance business because it never had one. Unlike SBC, the company doesn't worry about slowness in entering the long-distance market for the U.S. West subsidiary because its revenue forecasts for 2001 already assumed zero revenue from U.S. West long distance. And unlike SBC's Ameritech unit, U.S. West doesn't have to spend more to improve service because U.S. West service has already improved by leaps and bounds under the current capital spending plan.

Keep in mind that in spite of all the troubles detailed by AT&T and its peers, none of them are complaining about data revenue. And Qwest's entire network was built with data in mind from the beginning, which is one reason why Qwest gets far more high-end OCX business than its peers.

Among the largest communications vendors, Qwest dominates that fastest growing subset of data transport, which is the fastest growing portion of the business communications industry. With most of the quarter completed, Qwest is seeing 62 percent of all new sales coming from data and IT, with 40 percent in high end of the business market, Nacchio said.

Given the continued strength in Qwest's specialty fields, it's no wonder the company can easily reaffirm its original growth targets for the current quarter. First Call consensus predicts profits of 14 cents per share in the fourth quarter and 60 cents per share in 2001.

"If anything, we will continue as in the past to meet or beat the estimates that we've provided guidance on," Nacchio said. "What we're saying today is nothing different from what we said in September."

Nacchio believes even the dreaded economy could help.

"The economy ... will continue though to be a benefit to us in the West, as we enjoy some of the fastest growing MSAs (read: metro areas) in this country, particularly on the business side," Nacchio said.

Bring in the filter for that one, because he's oversimplifying it. High interest rates cost just as much money in Denver as in Chicago.

Still, he's right from a long-term perspective. People are following Horace Greeley's dictum: "Go west, young man."

Even German telephone power Deutsche Telekom (NYSE: DT) took Greeley's advice. Remember DT's failed attempt to buy Qwest? Didn't happen, and in any case, Qwest didn't need to be bought. The company is doing well on its own. 22GO>