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Stock Market & Financial Investment News

News Breaks
July 29, 2014
12:23 EDTFTR, VZ, S, WIN, CTL, TWindstream 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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July 22, 2015
11:32 EDTTAT&T July weekly volatility elevated into Q2 and outlook
AT&T July weekly call option implied volatility is at 30, August is at 17, September is at 16; compared to its 52-week range of 12 to 44, suggesting large near term price movement into the expected release of Q2 results on July 23.
09:03 EDTCTLCenturyLink expands global data center presence in 1H15
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08:39 EDTVZVerizon partners with U-Michigan to open autonomous vehicle test bed
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July 21, 2015
19:34 EDTTAT&T pleased with FCC order, sees closing DirecTV deal 'shortly' after approval
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18:54 EDTTAT&T announces Department of Justice completed review of acquisition of DirecTV
AT&T (T) released the following statement "We are pleased the Department of Justice has completed its review of our acquisition of DIRECTV (DTV). We look forward to gaining the approval of the Federal Communications Commission so we can quickly begin providing consumers with the benefits of this combination."
18:37 EDTVZVerizon CFO says video service to feature targeted ads, Reuters reports
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18:33 EDTTFCC chairman proposes to approve AT&T-DirecTV deal with conditions
In light of news reports concerning the proposed AT&T (T) and DirecTV (DTV) transaction, FCC chairman Tom Wheeler issued the following statement: "An order recommending that the AT&T-DirecTV transaction be approved with conditions has circulated to the commissioners... If the conditions are approved by my colleagues, 12.5M customer locations will have access to a competitive high-speed fiber connection. This additional build-out is about 10 times the size of AT&Tís current fiber-to-the-premise deployment... and more than triples the number of metropolitan areas AT&T has announced plans to serve. In addition, the conditions will build on the 'Open Internet Order' already in effect... First, in order to prevent discrimination against online video competition, AT&T will not be permitted to exclude affiliated video services and content from data caps on its fixed broadband connections. Second, in order to bring greater transparency to interconnection practices, the company will be required to submit all completed interconnection agreements to the Commission, along with regular reports on network performance... We will require an independent officer to help ensure compliance with these and other proposed conditions." Reference Link
18:24 EDTTFCC poised to approve AT&T acquisition of DirecTV, WSJ reports
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16:57 EDTTFCC poised to approve AT&T acquisition of DirecTV, DJ says
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16:28 EDTVZOn The Fly: Top stock stories for Tuesday
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15:11 EDTVZEarnings Watch: Microsoft up 5% since announcing Nokia writedown
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12:21 EDTVZOn The Fly: Top stock stories at midday
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08:59 EDTVZVerizon CFO says churn rate improvement shows company 'protecting its base'
Verizon CFO Shammo says the company needs to compete where the market takes it. Comments from Verizon's Q2 earnings conference call.
08:48 EDTVZVerizon sees percentage of activations on installments continuing to grow in Q3
Shammo said customer demand for device installment plans has increased, noting that the percentage of phone activations on installments grew to 49% in Q2, compared with 39% in Q1 and 18% a year ago. Phone activations on device installment plans totaled 4.7M in the quarter and Verizon now has more than 14M customers on these plans, representing about 16% of its postpaid phone base. The company believes that the percentage of phone activations on installments will continue to increase and will likely be around 60% in Q3. Comments made by Verizon CFO Fran Shammo speaking on the company's earnings conference call.
07:43 EDTVZVerizon says quality of the net additions 'remained strong' in Q2
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07:39 EDTVZVerizon sees FY15 consolidated revenue growth of at least 3%
For the full year, the company estimates consolidated revenue growth of at least 3%, excluding revenue from AOL. Consensus $131.3B.
07:38 EDTVZVerizon sees higher revenue growth rate in Q3 than in Q2
Consensus $32.87B. Verizon said regarding consolidated revenue outlook, "Verizon expects a higher year-over-year growth rate in third-quarter 2015 than in second-quarter 2015," noting that the estimate excludes revenue from AOL.
07:36 EDTVZVerizon says portion of AOL results immaterial to end of Q2
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07:35 EDTVZVerizon backs FY15 capex view of $17.5B-$18B
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07:32 EDTVZVerizon reports Q2 EPS $1.04, consensus $1.01
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