Qwest Stock Drops Due To SEC Accounting Inquiry

Qwest Communications International

By midafternoon Qwest's stock was trading at $9.35, compared with a close on Friday of $9.71, representing a 36 cents drop.

The SEC's request for information centers on Qwest's accounting policies, practices and procedures in 2000 and 2001.

During that time the SEC is questioning Qwest's revenue recognition and accounting of sales of optical capacity assets, the sale of equipment by Qwest to customers from which Qwest bought Internet services or contributed equity financing including equipment sales to KMC Telecom Holdings and Calpoint LLC.

Qwest formed a partnership with KMC to speed up its entry into the dial-up Internet market and has a multi-year agreement for managed wavelength services with Calpoint.

The SEC is also looking into changes in the production schedules and lives of some directories at Qwest Dex.

Qwest issued a statement that said its accounting policies, practices and procedures, including 2000 and 2001, comply with all applicable requirements.

The statement also said that the SEC informed the company that the informal inquiry is not an indication that it believes any violation of law has occurred.