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Stock Market & Financial Investment News

News Breaks
July 29, 2014
12:23 EDTCTL, T, FTR, VZ, S, WINWindstream REIT spin off plan provides jolt for stock, telecom sector
Shares of Windstream (WIN), which provides network communications services to businesses and residential consumers, are jumping after the company announced that it would spin off some of its assets into a real estate investment trust, or REIT. Two research firms had very different reactions to the move. WHAT'S NEW: Windstream said that it would spin of some of its assets, including its fiber and copper networks and other real estate, as a REIT. Expected to be completed by the first quarter of next year, the tax-free spinoff will enable Windstream to realize significant financial flexibility by lowering its debt by approximately $3.2B and increasing free cash flow to accelerate broadband investments, transition faster to an IP network and pursue additional growth opportunities, the company said. The REIT will be positioned to provide an attractive dividend to shareholders and grow revenue through lease escalation, capital investment and acquisitions, Windstream added. Windstream noted that the IRS had granted preliminary recognition of the tax-free nature of the spinoff and the qualification of the spun off assets for REIT status. The company said it expects to pay a dividend of 10c per share after the transaction, while the REIT will pay an annual dividend equivalent to 60c per share. REITs do not pay taxes on income that they distribute to unitholders. ANALYST REACTION: In a note to investors today, Oppenheimer analyst Timothy Horan said that the move would enable Windstream to avoid about $200M each year in potential taxes. The analyst noted that Windstream was cutting its overall dividend to 70c from $1, but he believes that the dividend has become much safer. Furthermore, the move is intelligent from a strategic, operational, and financial viewpoint, he believes. With its new structure, Windstream is worth at least $15 per share and could be worth as much as $18 per share, Horan estimated. The analyst kept a Perform rating on the stock. Much more skeptical about Windstream's move was Mike McCormack, an analyst at research firm Jefferies. The REIT spin-off is "an elegant way" for Windstream to cut its dividend, McCormack contended. The move does not change the company's fundamentals and calls into question the stock's valuation, as the portion of the company not spun off into the REIT appears to be a non-facilities based provider, the analyst wrote. As a result, Windstream's valuation is questionable, he contended. McCormack kept a $6 price target and Underperform rating on the shares. WHAT'S NOTABLE: Horan and McCormack both believe that other telecom companies with wireline businesses could follow Windstream's lead and spin off assets into a REIT. By obtaining a favorable preliminary ruling from the IRS, Windstream has already cleared the biggest hurdle to a REIT conversion, possibly setting the stage for other companies in the sector to follow suit, McCormack stated. If Windstream is able to carry out the spinoff, it means that every non-REIT communications and cloud company covered by Oppenheimer is now about 20% undervalued, wrote Horan. However, UBS analyst Scott Arwin does not expect large telecom companies like Verizon (VZ) and AT&T (T) to follow Windstream's lead, as he does not think the larger companies will want to open their networks to competitors at regulated rates. PRICE ACTION: In midday trading, Windstream rose 12% to $11.80. The stock was well off its high for the day of $13.30. Other stocks in the sector also rose, with Frontier Communications climbing 12% to $6.64, Century Link (CTL) advancing 4% to $39.15, AT&T (T) gaining 3.3% to $36.83, Verizon (VZ) rising 1.8% to $52.50 and Sprint (S) adding 1% to $7.75.
News For WIN;VZ;T;S;FTR;CTL From The Last 14 Days
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December 9, 2014
16:00 EDTVZOptions Update; December 9, 2014
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14:57 EDTVZTelecom equipment stocks rally after Verizon CFO comments on wireless CapEx
Telecom equipment stocks, which opened lower, rallied after Verizon (VZ) CFO Fran Shammo said he sees wireless CapEx continuing to trend upward. Shammo, speaking at the UBS 42nd Annual Global Media And Communications Conference, said, "The day we start to cut wireless CapEx is the day we start to wonder where the future of this industry is going." Ciena (CIEN), JDSU (JDSU), and Finisar (FNSR) all reversed earlier losses. PRICE ACTION: In afternoon trading, Ciena is up 1.5%, JDS Uniphase is up 3.8%, and Finisar is up 4.5%. Verizon, which was downgraded this morning to Neutral from Buy by RW Baird, is trading down almost 5%.
12:25 EDTVZOn The Fly: Midday Wrap
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10:38 EDTVZVerizon CFO Shammo says not interested in doing large international M&A deal
CFO Fran Shammo sees wireless CapEx continuing to trend up, sees wireline CapEx continuing to trend down. Says does not believe wireless CapEx will decline. Shammo commented that ""The day we start to cut wireless CapEx is the day we start to wonder where the future of this industry is going." Says dividend policy "very important." Says doesn't see share buybacks until balance sheet is delevered.
10:28 EDTT, S, VZVerizon drops after warning about promotional impact on profits
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10:27 EDTVZVerizon CFO says would sell towers for 'right price, right terms'
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10:23 EDTVZOn The Fly: Analyst Downgrade Summary
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10:17 EDTVZVerizon CFO Shammo says sees promotional pricing 'settling down' in 2015
Says Q4 has been a "pretty exciting" period, says seeing increase in activations, but seeing some increase in churn as well. Says has seen high volume in Q4 sales. Says continues to see strong momentum for wireless customer growth in Q4. Sees promotional pricing "settling down" in 2015. Shammo says social media, press has built this up as a price war; says rival's half-priced promotion "not as dramatic" as it looks. Says tablets a "tremendous" growth area for industry. Says streaming TV to mobile to begin in mid-2015. Says that over time, company believes can increase margins. Comments made at the UBS Global Media & Communications Conference. Verizon shares are down 3.8% to $47.04 in morning trading.
09:38 EDTVZActive equity options trading
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07:40 EDTVZVerizon competition increased, company should be able to respond, says Canaccord
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07:32 EDTVZ, T, CTLUBS to hold a conference
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06:15 EDTVZVerizon downgraded at RW Baird
As previously reported, Baird downgraded Verizon to Neutral from Outperform. The firm downgraded shares citing last night's negative pre-announcement due to increasing competitive concerns, margin pressures, higher churn, and full valuation. Price target lowered to $50 from $54.
06:01 EDTVZVerizon downgraded to Neutral from Outperform at RW Baird
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December 8, 2014
18:24 EDTT, VZOn The Fly: After Hours Movers
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17:05 EDTVZVerizon sees Q4 impacts of promotional offers will pressure wireless EBITDA, EPS
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14:56 EDTSMDC Partners climbs for third day after making announcement on CRM unit
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09:03 EDTCTLCenturyLink awarded task order from Department of Homeland Security
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08:06 EDTFTRFrontier Communications now sees FY14 CapEx $575M-$600M
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07:23 EDTFTRUBS to hold a conference
42nd Annual Global Media & Communications Conference is being held in New York on December 8-10 with webcasted company presentations to begin on December 8 at 8 am; not all presentations may be webcasted. Webcast Link
December 5, 2014
06:01 EDTTTechNet: Combined AT&T/DirecTV will increase broadband development
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