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Qwest to cut 11,000 jobs
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September 7, 2000: 2:22 p.m. ET
Telecom firm says reductions designed to streamline business
By Staff Writer Martha Slud
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NEW YORK (CNNfn) - Qwest Communications International Inc. said Thursday it will cut 11,000 jobs, or about 15 percent of its work force, by the end of next year, in an effort to lower costs and streamline operations in the wake of its merger with regional phone carrier U S West.
The Denver-based telecommunications company said it is shifting resources to focus on high-speed Internet access, wireless communications, digital subscriber lines and other services. In addition to cutting jobs it deemed non-essential, it said it is selling about $1 billion in non-core assets.
 Qwest, the fourth biggest U.S. long-distance phone company, also raised revenue projections for this year and next, citing its business performance and smooth merger integration. The $43.5 billion deal closed June 30.
"We think the future is about broadband, Internet communication and application services," Chairman and Chief Executive Joseph Nacchio told CNNfn. "We think voice is a simple application. It's not a place you want to be heavily dependent on, particularly in old technologies."
Qwest will cut 4,500 jobs, out of a total roster of 71,000, by the end of 2000 and another 6,500 by the end of 2001. Most of the jobs are white-collar positions, the company said. An additional 1,800 contractor jobs will be eliminated by the end of next year.
Qwest expects to take a charge of $200 million-to-$300 million in the current third quarter for severance costs, plus another $200 million-to-$400 million in one-time charges for contract and lease terminations and other special costs.
The company said 2000 revenue is expected to total $18.8 billion to $19.1 billion, up from an original projection of $18.5 billion. Targets for 2001 now range from $21.3 billion to $21.7 billion, up from $21 billion.
In afternoon trading, Qwest (Q: Research, Estimates) stock fell $3.88 to $47.63.
Telecom analyst Patrick Comack, of the brokerage Guzman and Co., said that while Qwest's announcements were mostly upbeat, some investors may be disappointed that the company hasn't realized more synergies from the recently completed merger.
The job cuts are not surprising, Comack said.
"This is expected. This is why mergers happen," he said. Nacchio "has said many times that he believes U S West was run poorly and there was way too much fat in the company, and he believes he can fix it."
The company also said it will generate roughly $1 billion in cash through selling non-strategic investments in about 15 companies. The sale will include the shedding of a portion of Qwest's investment in Global Crossing Ltd. (GBLX: Research, Estimates) that was obtained through the merger. No further details of the Global Crossing sale were disclosed.
U S West had originally agreed to merge with Bermuda-based telecom upstart Global Crossing (GBLX: Research, Estimates) last year, but changed its position in July 1999 after the deal met with widespread unpopularity on Wall Street.
Qwest also said it expects to net an additional $1.75 billion in cash over the next year through the previously announced sale of 570,000 access lines in its 14-state territory. After the sale, Qwest will operate about 17 million access lines in its local service area.
The company also said Thursday it has launched a new unit, Qwest Digital Media, a multimedia company focused on broadband Internet service. The unit is headed by David Woodrow, a former executive vice president at Cox Communications. 
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