CenturyLink beats profit forecast

CenturyLink, reporting revenues Thursday for the first time since acquiring Qwest Communications, posted a smaller-than-expected decrease in profits as gains in high-speed Internet clients helped offset access line losses.

Profit for the Monroe, La.-based rural telephone operator slid to $211.1 million, or 69 cents per share, versus $252.6 million, or 84 cents per share, while the period last year.

Not counting special deductions, including $35.5 million in severance and integration costs of Qwest and Embarq, Sprint’s former landline business, profit was 76 cents per share, the company said.

The profit slide

The profit slide was forecast as more consumers swap their landline telephone service for cellphones and Internet-based voice applications. While the three-month period, CenturyLink lost 56,000, or 7.5 percent, of its landline clients, leaving the company with 6.4 million lines.

CenturyLink neutralized those losses by gaining 52,000 new high-speed Internet clients, ending the quarter with 2.4 million broadband subscribers.

Qwest’s revenue, which was reported separately from CenturyLink’s, declined 4.1 percent to $2.85 billion. Profit at Qwest was $211 million, compared with $38 million in 2010, when the company took a $162 million hit from Medicare-related charges.

Looking ahead, Glen Post, CenturyLink’s chief executive, said the company, which traditionally is conservative with its estimates, expects profit in the second quarter of between 63 cents and 67 cents per share on about $4.4 billion in revenue.

In April, CenturyLink closed on its acquisition of Qwest and announced days later it planned to acquire Savvis Inc. for $2.5 billion to bolster its data center and cloud computing portfolio.

The Savvis acquisition

Post said the Savvis acquisition, which is expected to close in the second half of 2011, is a “positive then step” for CenturyLink to expand its offerings to businesses, which was an area of strength for Qwest.

After the integrations of Qwest and Saviss are complete, 58 percent of CenturyLink’s revenue will come from business clients, Post said while a conference call Thursday.