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(AP) - Qwest Communications International Inc. posted a profit for its third quarter Wednesday, but said the continued slide of its traditional phone business is forcing it to cut 1,200
jobs, 3 percent of its work force. 

The cuts will come before the end of the year, which will leave the company with 33,500 employees, 9 percent fewer than at the end
of last year. 

That's about the same rate at which customers are
canceling their phone service to go wireless or sign up with a cable company.

      The cuts will come from all levels and units of the company,
Chief Operating Officer Tom Richards said.

      The Denver-based phone company provides service in Minnesota and several other Midwestern states.  It's the country's third-largest phone company. Qwest earned $151 million, or 9 cents per share, in the three months that
ended Sept. 30. 

That was down 93 percent from $2.06 billion, or
$1.08 per share, a year ago, but those 2007 results were boosted by a $2.1 billion tax benefit.

      Revenue fell 2 percent to $3.38 billion.

      Analysts polled by Thomson Reuters had expected the company to
earn 10 cents per share on $3.33 billion in revenue. Analyst Tim
Horan at Oppenheimer & Co. said that Qwest met earnings
expectations after taking into account a $30 million net charge for
severance benefits and a lease restructuring.


      Qwest also said it expects results this year to come in at the
low end of its previous forecast, which called for earnings before
interest, taxes, depreciation and one-time items to fall 1 or 2
percent.

      Analysts were already expecting a 2.25 percent full-year decline
in that earnings measure, which fell 6 percent in the third quarter
to $1.08 billion.

      Qwest shares fell 31 cents, or 12 percent, to $2.29 in morning
trading Wednesday, nearly reversing a 17 percent gain Tuesday.

      Qwest lost 320,000 phone lines during the quarter, to end with
11.9 million. The rate of decline is similar to the one reported by
larger peers AT&T Inc. and Verizon Communication Inc.

      Like AT&T, Qwest posted weak numbers for broadband recruitment
in the second quarter but saw a minor rebound in the third quarter,
adding 61,000 customers to its high-speed Internet service. 

Qwest
attributed the increase to an ongoing upgrade to higher download
speeds, as well as aggressive marketing.


      "I think we're holding our own against cable," chief executive
Ed Mueller told analysts on a conference call.

      Chief Financial Officer Joe Euteneuer said the company was in
good shape to handle its $14 billion debt load, even as credit
markets have more or less frozen. 

With interest rates at
"irrational levels," Qwest will be focusing on paying off debt
rather than refinancing it, he said.

      The company was set to spend the last $193 million of a stock
buyback program in the fourth quarter, but said Wednesday that it
was extending the deadline, since it can't finance the buyback by
borrowing at attractive rates.

      Executives said Qwest would stick to its dividend, which at 32
cents per year works out to a 13.8 percent yield on the stock.

Analyst Jason Armstrong at Goldman Sachs suggested on the call that
the company slash the dividend and use it for cash requirements,
since investors don't seem to be giving the company much credit for
the high yield.

      "We won't adjust the dividend up and down based on the current stock price," Mueller said.

      Communications services for large businesses were a bright spot
in the quarter, with revenue of $1 billion, up 7 percent from a
year ago. 

Qwest said it had good traction with the government,
getting contracts from the Department of Veterans Affairs, NASA and
the General Services Administration. However, profit margins
declined in the segment.

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The job cuts will come before the end of the year, which will leave the company with 33,500 employees, 9 percent fewer than at the end
of last year.

Qwest 3Q profit down; will cut 1,200 jobs

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