Qwest's Long Run
Stocks: (Q)(T)(CMCSA)
To say that buying shares in Qwest (Q) a year ago was a good investment is an understatement. The stock has run from $3.45 to $7.61, very near its 52-week high.
Most of the stocks in large telecom companies have had increases in their share prices in the last twelve months, but very few have doubled. Qwest has increased its market capitalization by $7 billion. Not bad for a company with $13 billion in revenue.
Qwest's numbers have improved, but not markedly. The last few quarters, revenue has been flat at around $3.5 billion. Operating income has improved particularly in the last quarter when it hit $354 million, up from the immediately previous quarter of $221 million.
The excitement about Qwest's prospect may be premature. The company is putting fiber-to-the-home deployments into the market, but, so far, Qwest is a relatively small player in an unproven market.
There has been at least some expectation that one of the larger telecom companies would buy quest as the likes of SBC and AT&T got married, but this has not materialized.
Wall Street is clearly getting concerned about Qwest's valuation. Recent analyst actions on the company include "Underperform" and "Sell" recommendations from Credit Suisse, Citigroup and Stifel Nicolaus. Part of Wall Street's concern is that Comcast is beginning to be more aggressive in Qwest markets offering the triple play of TV, VoIP, and broadband internet.
Cost controls have kept operating income moving in the right direction, but with most of these cuts behind it, the question about Qwest is whether it can make the topline grow. So far, the answer has been "no".
Douglas A. McIntyre can be reached at douglasamcintyre@gmail.com. He does not own securities in companies he writes about.
To say that buying shares in Qwest (Q) a year ago was a good investment is an understatement. The stock has run from $3.45 to $7.61, very near its 52-week high.
Most of the stocks in large telecom companies have had increases in their share prices in the last twelve months, but very few have doubled. Qwest has increased its market capitalization by $7 billion. Not bad for a company with $13 billion in revenue.
Qwest's numbers have improved, but not markedly. The last few quarters, revenue has been flat at around $3.5 billion. Operating income has improved particularly in the last quarter when it hit $354 million, up from the immediately previous quarter of $221 million.
The excitement about Qwest's prospect may be premature. The company is putting fiber-to-the-home deployments into the market, but, so far, Qwest is a relatively small player in an unproven market.
There has been at least some expectation that one of the larger telecom companies would buy quest as the likes of SBC and AT&T got married, but this has not materialized.
Wall Street is clearly getting concerned about Qwest's valuation. Recent analyst actions on the company include "Underperform" and "Sell" recommendations from Credit Suisse, Citigroup and Stifel Nicolaus. Part of Wall Street's concern is that Comcast is beginning to be more aggressive in Qwest markets offering the triple play of TV, VoIP, and broadband internet.
Cost controls have kept operating income moving in the right direction, but with most of these cuts behind it, the question about Qwest is whether it can make the topline grow. So far, the answer has been "no".
Douglas A. McIntyre can be reached at douglasamcintyre@gmail.com. He does not own securities in companies he writes about.
posted by douglas mcintyre at 1:49 PM
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