Qwest Says SEC Inquiry Becomes Formal Review

A formal review gives the SEC power to subpoena information from the company. Qwest, the No. 4 U.S. local telephone company, said it is cooperating fully with the SEC and will continue to do so.

In March, the Denver-based company said it had received an informal inquiry from the SEC regarding its accounting policies, practices and procedures in 2000 and 2001. The SEC already had been reviewing Qwest's purchase of assets from bankrupt telecommunications firm Global Grossing Ltd.

On Monday, Qwest said the SEC staff recommended action against the carrier for excluding certain information, most related to its acquisition of US West, in a January 2001 earnings release. The securities regulators are also probing directory publication revenue and sales of equipment to those from which it would acquire services.

Shares of Qwest closed at $7.26, down 29 cents, or 3.84 percent, on the New York Stock Exchange. The stock has plunged about 44 percent so far this year as the company struggled to relieve a cash crunch, revive investor confidence, and boost revenue growth.

Qwest and other high-speed communications companies have been battered by a glut of network capacity, scant demand in the weak economy, falling prices, and stiff competition.

Earlier on Thursday, SoundView Technology Group cut its first-quarter and full-year earnings forecasts for Qwest, citing pricing pressures in the company's wholesale and corporate segments.

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