Wednesday January 26, 6:36 pm Eastern Time
FOCUS-U S West's quarterly profits rose 7 percent
(adds details in paragraphs 4,7,11)
NEW YORK, Jan 26 (Reuters) - U S West Inc., the regional telephone company being acquired by Qwest Communications International Inc. (NasdaqSC:QWST - news), posted a better-than-expected 7 percent rise in fourth-quarter operating profits due to strong growth in sales of data and wireless services.
Denver-based U S West (NYSE:USW - news), the dominant local telephone company in 14 states from Minnesota to Washington, said earnings, excluding one-time items, rose to $425 million or 83 cents a share, compared with $397 million or 78 cents a share a year ago.
The results topped Wall Street's earnings expectations of 78 cents a share, according to research firm First Call/Thomson Financial.
An accounting change for U S West Dex, the company's directory publishing unit, pushed the profits above Wall Street expectations. Without that change, U S West said its results generally would have been in line with Wall Street expectations.
Including a loss related to the sale of its stake in its former merger partner Global Crossing Ltd. (NasdaqNM:GBLX - news), U S West's profits fell 58 percent to $166 million or 32 cents a share.
U S West's revenues rose 6.3 percent to $3.5 billion, compared with $3.3 billion a year ago. Nearly 78 percent of that revenue growth came from growth in U S West's data and wireless operations.
U S West shares rose 9/16 to 67-5/16 in afternoon trading on the New York Stock Exchange. The shares of merger partner Qwest added 5/16 to 40-3/16, also on the NYSE.
``Exceeding our 1999 targets in the emerging data, Internet, wireless and even video growth areas of our business is a significant milestone for U S West,' said U S West Chairman Sol Trujillo.
``Continuing to transform U S West into a higher growth-oriented vehicle will be critical as we move closer to completing our merger with Qwest,' Trujillo said.
U S West, the smallest of the Baby Bell local telephone companies, has been shifting away from its history as a stodgy local telephone company and investing heavily in more lucrative, faster-growing businesses such as wireless, data and Internet.
The data and wireless investments will continue to weigh on U S West's near-term profits. U S West told analysts in a conference call it expects its 2000 earnings per share to grow by mid-single digit rates with revenues increasing about 6 percent.
U S West said its fourth quarter data revenues rose 36 percent to $486 million. Revenues for its !nterprise unit, which includes its high-speed DSL (digital subscriber line) service, grew 61 percent to $252 million.
Revenues for wireless personal communications services (PCS) revenues rose 71 percent to $78 million.
The company added 122,000 wireless PCS subscribers in the quarter, bringing the total to 465,000. Average monthly revenue per unit was $55, which is below the $58 average revenues seen in the third quarter.
U S West last year agreed to be acquired by Global Crossing, but that deal was later canceled after Qwest, the No. 4 U.S. long-distance company, launched a bidding war and wrested U S West away from its original suitor.
U S West's planned $36 billion acquisition by Qwest is expected to close by mid-year. The deal will combine U S West's local, wireless and data operations with Qwest's long-distance and high-speed fiber optic communications network.
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