When Should Investors Follow Insider Trades? [View article]
Two years after this article the public story for Telular is coming to an end. They are being taken private at $12.61 per share. The deal was still pending at the time of this comment.
Changes At Level 3 Communications Could Spell Opportunity [View article]
That's true, LVLT has been very painful for those that believed in the vision for a long time. The change in leadership is overdue IMO. They've grown the enterprise business while concentrating on a massive integration. New leadership may be what the doctor ordered, although no rush since this is not a 2013 story. That said given there largest enterprise market (NA) looks encouraging I am more positive going forward than I have been in a very long time.
Pfizer Will Reward Shareholders With Zoetis Spin-Off [View article]
You are also giving up a 3.3% ($PFE) yield for a 0.8% yield making the deal less attractive than the 7% "discount" suggests. I have not read any filings so maybe there is something I am missing that makes this spin-off more compelling???
Pfizer Will Reward Shareholders With Zoetis Spin-Off [View article]
Anyone hoping to make a quick 7% gain may be very disappointed. If 160m+ shares are exchanged and folks start selling in the hopes to get the discount turned into cash it won't take long for the 7% to evaporate. It may pay not to exchange but buy in the open market if a sell off occurs. You could get your 7% without giving up any $PFE shares. Another strategy to accumulate shares could be to sell puts at the first sign of a sell off or dip in the price to get a discount to the offer price.
Frontier Communications Has A Serious Revenue Problem [View article]
mddb, thanks for taking the time to lay out a detailed reply. It is appreciated. As you know I've written specifically about the pension issues in previous articles so I'm certainly not going to defend management. The point I'll make is the pension issue is extremely long term when compared to the revenue issue. To have any hope of resolving the pension issue and maintain the dividend they need to turn around the revenue issue so at this point in time I'd be much more concerned with the latter.
I think where we might disagree is if they turn the revenue picture around and this leads to an expected increase in FCF then IMO the unfunded liabilities should be manageable. Granted that's a big IF.
I wasn't trying to compare FTR with T just making an observation that large unfunded liabilities seem to be the rule rather than the exception in the RBOC's, CLEC's of past.
I also get the deep mistrust with management. I remember when FTR management sounded like today's WIN management, i.e., the dividend is absolutely safe, trust us until FTR cut it. (A note to WIN holders - I'm am not saying WIN will cut their dividend)
Is It Time To Buy Into Windstream's High Yield? [View article]
Updated WIN's revenue trends. Extended the trends thru 2014. No surprises after Q1, all still following the trends for the most part, including and most importantly the largest contributor - Business, still tracking nicely.
For those interested the info is located below the FCF data at: http://bit.ly/15QbdbW
Frontier Communications Has A Serious Revenue Problem [View article]
Jason, I never said the dividend was in immediate danger. If you look at the table in the article it shows FCF in excess of $300m over what is needed to pay the dividend for a few years but I think it's clear it is not sustainable over the long term time if they constantly bleed revenue at the rate they are going. Yes they can deleverage and that is also reflected in the table by using excess cash. As I said in the article, "FTR has a few years to turn this ship around", meaning stopping the revenue losses.
Is It Time To Buy Into Windstream's High Yield? [View article]
Tom if I understand you right they cannot afford to borrow to pay dividends in the event FCF isn't there. The credit facility includes several covenants they cannot cross without default. The leverage ratio is already to high and getting anywhere close to the maximum leverage ratio in the covenants is not good policy and extremely risky. The other trigger is the interest coverage ratio. Increasing debt even at low rates could push these triggers in the wrong direction. The dividend is very dependent on improving FCF IMO.
Is It Time To Buy Into Windstream's High Yield? [View article]
Tom, I've updated the FCF data and extended the graphs if you are interested. The data is from the WIN website. The link is at: http://bit.ly/15QbdbW
This is a quick update of the data, I haven't read the conference call etc., so I'm not going to draw any conclusions at this point other than what I shared in the article.
Is It Time To Buy Into Windstream's High Yield? [View article]
They do sound confident. When I find some time I'll incorporate Q1 results into my analysis. I suspect it won't change much but we'll see.
I don't know about probabilities but the general market isn't buying management's confidence so someone is wrong. FTR's past confidence & CTL's recent cut could play a part but that's just speculation.
A quick check would be to look at the gap between the FCF line and dividend line. A widening gap is good, shrinking is not so good. Anyway I hope you are correct and it works out well.
Frontier Communications Has A Serious Revenue Problem [View article]
Thank you SGM and you make valid points. As you probably know CTL has partially veered down this path by cutting the dividend and announcing a stock buyback at even cheaper prices since the cut had a shock impact. If FTR cut the dividend I could easily see the stock dropping below $3 which of course would be bad for the current stockholder but great for buybacks and/or strengthening the balance sheet through debt reduction.
It will also be interesting to see the market impact when Bernanke takes away the punch bowl.
Frontier Communications Has A Serious Revenue Problem [View article]
Thank you rgperrin & good question. I just looked over the S&P report and they see slowing customer losses (which look better than the actual revenue losses; both plotted in the graph showing Q1 results above) as good news. They also use adjusted FCF vs actual FCF which lowers the FCF payout ratio. My guess is since there 12 month target is 34%+- over the current price justifies the buy rating. They also rate risk as medium which I would disagree with at this point. They see revenue turning the corner at some point and they may be right, it's just an unknown and very speculative at this point IMO.
BTW I noticed FTR now includes a slide in their presentation showing actual FCF and in the notes on that slide state, "Dividend payout ratio was 48% and within our estimated range". The 48% is based on adjusted FCF not the information on that slide.
Frontier Communications Has A Serious Revenue Problem [View article]
True they have unfunded liabilities in excess of a billion. It shows up on the balance sheet under long term liabilities labeled "Pension and other post-retirement benefits".
Given the market they will probably easily exceed the assumed rate of return for the pension fund. This only becomes a bigger issue in a major downturn. This is one of the reasons I mentioned in the article as to why the FCF payout ratio needs to stay below 55% along with debt & other unforeseen problems.
Many telecom companies have an unfunded liability. Look at T at about $42B for Post-employment benefit obligations. Seems to come with the territory when looking at the older telecom companies including VZ, CTL, etc.
Of course none of this matters if the revenue continues on its current track. It's all about revenue. That said I should note I do not own T, VZ or CTL and if FTR doesn't get their revenue act together by year end I may not own this one either.
Is It Time To Buy Into Windstream's High Yield? [View article]
Tom, just noticed your last comment, for some reason it did not show up before my last post. All three companies have a section in their 10-K filings titled, "Off-Balance Sheet Arrangements". Here is what they say: FTR:We do not maintain any off-balance sheet arrangements, transactions, obligations or other relationships with unconsolidated entities that would be expected to have a material current or future effect upon our financial statements.
WIN: We do not use securitization of trade receivables, affiliation with special purpose entities, variable interest entities or synthetic leases to finance our operations. Additionally, we have not entered into any arrangement requiring us to guarantee payment of third party debt or to fund losses of an unconsolidated special purpose entity.
CTL:We have no special purpose or limited purpose entities that provide off-balance sheet financing, liquidity, or market or credit risk support and we do not engage in leasing, hedging, or other similar activities that expose us to any significant liabilities that are not (i) reflected on the face of the consolidated financial statements, (ii) disclosed in Note 15—Commitments and Contingencies to the consolidated financial statements in Item 8 of this report, or in the Future Contractual Obligations table included in this Item 7 above or (iii) discussed under the heading "Market Risk" above.
CTL's biggest liabilities referred to above are litigation matters, which at this point are dependent on the outcome at trial. The Dutch bankruptcy proceeding for KPNQwest could be up th $5.6B assuming they lose the case big time.
When Should Investors Follow Insider Trades? [View article]
Changes At Level 3 Communications Could Spell Opportunity [View article]
Pfizer Will Reward Shareholders With Zoetis Spin-Off [View article]
Pfizer Will Reward Shareholders With Zoetis Spin-Off [View article]
Frontier Communications Has A Serious Revenue Problem [View article]
I think where we might disagree is if they turn the revenue picture around and this leads to an expected increase in FCF then IMO the unfunded liabilities should be manageable. Granted that's a big IF.
I wasn't trying to compare FTR with T just making an observation that large unfunded liabilities seem to be the rule rather than the exception in the RBOC's, CLEC's of past.
I also get the deep mistrust with management. I remember when FTR management sounded like today's WIN management, i.e., the dividend is absolutely safe, trust us until FTR cut it. (A note to WIN holders - I'm am not saying WIN will cut their dividend)
Is It Time To Buy Into Windstream's High Yield? [View article]
For those interested the info is located below the FCF data at:
http://bit.ly/15QbdbW
Frontier Communications Has A Serious Revenue Problem [View article]
Is It Time To Buy Into Windstream's High Yield? [View article]
Is It Time To Buy Into Windstream's High Yield? [View article]
http://bit.ly/15QbdbW
This is a quick update of the data, I haven't read the conference call etc., so I'm not going to draw any conclusions at this point other than what I shared in the article.
Is It Time To Buy Into Windstream's High Yield? [View article]
I don't know about probabilities but the general market isn't buying management's confidence so someone is wrong. FTR's past confidence & CTL's recent cut could play a part but that's just speculation.
A quick check would be to look at the gap between the FCF line and dividend line. A widening gap is good, shrinking is not so good. Anyway I hope you are correct and it works out well.
Frontier Communications Has A Serious Revenue Problem [View article]
It will also be interesting to see the market impact when Bernanke takes away the punch bowl.
Frontier Communications Has A Serious Revenue Problem [View article]
BTW I noticed FTR now includes a slide in their presentation showing actual FCF and in the notes on that slide state, "Dividend payout ratio was 48% and within our estimated range". The 48% is based on adjusted FCF not the information on that slide.
Frontier Communications Has A Serious Revenue Problem [View article]
Frontier Communications Has A Serious Revenue Problem [View article]
Given the market they will probably easily exceed the assumed rate of return for the pension fund. This only becomes a bigger issue in a major downturn. This is one of the reasons I mentioned in the article as to why the FCF payout ratio needs to stay below 55% along with debt & other unforeseen problems.
Many telecom companies have an unfunded liability. Look at T at about $42B for Post-employment benefit obligations. Seems to come with the territory when looking at the older telecom companies including VZ, CTL, etc.
Of course none of this matters if the revenue continues on its current track. It's all about revenue. That said I should note I do not own T, VZ or CTL and if FTR doesn't get their revenue act together by year end I may not own this one either.
Is It Time To Buy Into Windstream's High Yield? [View article]
FTR:We do not maintain any off-balance sheet arrangements, transactions, obligations or other relationships with unconsolidated entities that would be expected to have a material current or future effect upon our financial statements.
WIN: We do not use securitization of trade receivables, affiliation with special purpose entities, variable interest entities or synthetic leases to finance our operations. Additionally, we have not entered into any arrangement requiring us to guarantee payment of third party debt or to fund losses of an unconsolidated special purpose entity.
CTL:We have no special purpose or limited purpose entities that provide off-balance sheet financing, liquidity, or market or credit risk support and we do not engage in leasing, hedging, or other similar activities that expose us to any significant liabilities that are not (i) reflected on the face of the consolidated financial statements, (ii) disclosed in Note 15—Commitments and Contingencies to the consolidated financial statements in Item 8 of this report, or in the Future Contractual Obligations table included in this Item 7 above or (iii) discussed under the heading "Market Risk" above.
CTL's biggest liabilities referred to above are litigation matters, which at this point are dependent on the outcome at trial. The Dutch bankruptcy proceeding for KPNQwest could be up th $5.6B assuming they lose the case big time.