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Wednesday, September 27, 2006

Qwest Goes Shopping? (Q)(BLS)(VZ)(T)(BT)

In the opinion of The New York Times, Qwest, the big phone company, has enough cash to buy something. Qwest has $1.8 billion in cash.

But, Qwest does not have its own cell-phone business the way AT&T and Verizon do. It also does not have the billions of dollars that Verizon is investing in fiber-to-the-home which may allow it to compete with the cable guys for multi-channel TV and broadband.

No, Qwest's big load of cash makes it a takeove target. With a market cap of $17.1 billion, all that cash helps another company pay to buy Qwest. The company's stock may make it seem expensive because it is up from $3.80 to $8.98, but over the last six months, AT&T stock has done even better. Another stock that has done nearly as well is British Telecom.

Qwest's better balance sheet does not mean it will go shopping, as the Times suggests. It means it will be shopped and the buyer may not be based in the US.

Douglas A. McIntyre can be reached at He does not own securities in companies that he writes about.

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