Qwest Communications has admitted it incorrectly recognized optical-capacity revenue amounting to $1.16 billion in the years 1999, 2000 and 2001. The company’s new management team has withdrawn its guidance for fiscal 2002, and will now report its results for Q2 2002 and guidance for 2002 on August 8. Analysts believe Qwest will struggle to keep the support of its bankers in the weeks ahead.
Qwest’s accounts first came under the spotlight following the collapse of Global Crossing. Speculation mounted that the companies had engaged in hollow swaps of bandwidth to inflate revenue.
The SEC has also probed Qwest’s deal with KMC Telecom Holdings Inc under which Qwest sold equipment worth $450 million to the company and then bought Internet services from it.