Phone company CenturyLink Inc.'s second-quarter profit fell 78 percent as it had to write off more than expected of the value of Qwest, the larger phone company it bought in April.
In another wrinkle to the $12.2 billion acquisition, the company lost more broadband subscribers in the Qwest areas than it gained, something that never happened when Qwest was a standalone company.
CenturyLink also trimmed its full-year earnings forecast, saying government customers were apparently struggling with budget issues.
Its shares fell $2.68, or 7.2 percent, to $34.25 in afternoon trading. Earlier, they hit a 52-week low of $33.85.
CenturyLink Inc. said Wednesday that its net income fell to $102 million, or 17 cents per share, for the three months ended June 30. That's down from $238 million, or 79 cents per share, a year ago.
The Monroe, La., company said a preliminary assessment of the fair value of Qwest assets resulted in $200 million more in depreciation and amortization than it had expected, reducing earnings by 20 cents per share.
Excluding those and other charges, CenturyLink said its earnings were 64 cents per share, 3 cents lower than analysts polled by FactSet had expected.
Revenue rose to $4.41 billion from $1.77 billion a year ago, due to the Qwest acquisition. Analysts expected $3.88 billion.
Compared to the combined revenue of CenturyLink and Qwest in last year's second quarter, revenue was down 4.9 percent on the continued loss of phone lines.
After the deal, CenturyLink is the country's third-largest phone company by number of lines, with 15 million scattered over 37 states. Qwest had phone customers in 14 western states and was based in Denver.
CenturyLink added 12,200 broadband subscribers in the quarter, which compares with 37,000 for the combined companies in last year's quarter. On a conference call with analysts, Chief Operating Officer Karen Puckett said it was mainly customers who didn't get phone service from CenturyLink that were abandoning the company, and that it was taking steps to curb further flight.
The company said it cut its earnings forecast from a previous range of $2.55 to $2.65 per share to $1.60 to $1.70 per share. Analysts had been expecting $2.71 per share.
The company also raised its revenue forecast by $300 million to a range of $15.2 billion to $15.4 billion to account for the $2.5 billion acquisition of data-center operator Savvis Inc. two weeks ago. Analysts had been expecting $15.47 billion.