Can Windstream Maintain Its Ample Dividend Yield? [View article]
Just look at the free cash flow. In the March quarter they generated a pitiful amount of FCF. One quarter doesn't mean much, but they likely will not have any additional cash flow to reduce debt after paying the dividend each quarter. They should cut the dividend in half if they have any hope of delevering. FTR was smart to cut their unsustainable dividend when the did. They can now delever. I suspect WIN will need to do the same. I wouldn't bet on their new business lines driving additional FCF anytime soon.
I see how WIN is trying to diversify their business, but it is quite costly to do so - with no guarantee it will work. I'll stick with FTR and its slow bleed.
Q1 was pretty bad for WIN from a cash flow basis. They took in $305M (down from $439M in 2012) in cash from operations and spent $235M on that cash for cap ex and other investing activities, leaving only $70M for the dividend. Unfortunately that dividend cost $148M, so they had to borrow the rest. The share count was up again the quarter, adding to the dividend bill. The dividend here looks completely unsustainable considering the high amount of debt. They would be wise to cut it in half while they attempt this transformation. FTR has plenty of excess cash flow to pay down debt. Their revenues aren't gonig to zero. Their business model is sustainable IMO. I'd much rather but it than WIN.
Frontier Communications Has A Serious Revenue Problem [View article]
If you understand free cash flow, you will see the dividend is not in any danger of being cut. The co. is generating ~$300M in FCF a year in excess of what is needed to pay the dividend. They can delever and maintain the dividend. They are cutting $100M in cash operating expenses this year...mitigating revenue declines. Operating income is a better metric to look at.
Is Windstream The Next Dividend Death Trap? [View article]
I have reviewed the pension obligations for FTR as of 12/31...seem pretty manageable to me. What makes you think they are a death sentence? They aren't light but they aren't overwhelming either.
Frontier Communications First Quarter Earnings Preview [View article]
It doesn't sound like you understand financial statements, specifically the cash flow statement. If you were to look at it you would see that the company is generating about $300M in FCF in excess of the dividend.
If a company cuts costs at or near the decline in revenues, operating income stays about flat. No worries.
Most of FTR's debt is trading well in excess of par, about 110. If a company is in "dire straights" their debt does not trade at this level.
You are correct that they are refi'ing debt, at higher rates because the maturities are much farther out than the debt they are retiring. Again, no worries.
Yes they will take a loss for tendering a bunch of debt during Q2 in excess of par. I need to look at the callable features of the rest of their debt - it must not be callable at par since most of their outstanding maturities are, again, trading well in excess of par. They will likely have even more cash at the end of Q1 and even more at the end of Q2 unless they tender for some more debt. They don't have any debt maturities until 2014, at that is only $200M. I don't know what they are going to do with all this cash. They ran the biz just for for a year or so with only $300M in cash, now they have like $1.5B in cash.
I'm not worried. If you are, it is likely you don't fully understand accounting and the bond market.
Is Windstream The Next Dividend Death Trap? [View article]
Does anyone here understand free cash flow? GAAP net income is irrelevant when calculating dividend payout ratios for companies like FTR. They have a TON of non-cash expenses that run through the income statement. If you looked at the cash flow statement you would see they generated $1.55B in CASH from operations in 2012. They can capital expenditures of $800M, leaving $755M in free cash flow. The dividend only cost $400M, leaving $355M in cash for debt reduction or holding on the balance sheet or whatever. In this case, FTR issued more debt to refi existing debt. I'm not sure why they are carrying so much cash right now...a question for mgmt for sure. But the dividend is more than safe at this point if you just understood how cash flow works. As for the others, I don't know - except for WIN. I briefly looked at that. They have ZERO excess cash flow to reduce debt. I'd be worried about that dividend.
Frontier Communications First Quarter Earnings Preview [View article]
Staggering rate? Since when is 3-4 percent "staggering?" WIN has no excess cash flow to pay down debt...FTR has plenty. Dividend looks a lot safer at FTR than WIN. FTR can actually delever as well. Their goal is to get to 2.5x EBITDA by early 2015. They can actually get there. For some reason they are holding onto tons of excess cash right now...probably more as of March 31. I'm not sure if they are planning to call some of their outstanding debt. Their net debt is actually the lowest it has been since they completed the VZ transaction.
Lee Enterprises's Revenue Is Starting To Stabilize [View article]
It's steady as she goes now for LEE. BRK just refi'ed the Pultizer notes. I'm sure Buffett wants to buy LEE but he is notoriously cheap, so I'm glad LEE isn't letting it go for too low a price. There is a clear path to debt reduction and likely debt refi.
Why would you short a stock that has already been beat up so much, especially when you have very little financial information for the last 12 months? Seems like there are better risk./rewards than OCZ. I'm not sure you or Ashraf know what you are doing, especially considering you have flipped flopped on this stock about a dozen times in the last 9 months.
Why Caterpillar Shares Could Drop To $50 And Still Be Fairly Valued [View article]
I have been short the stock since $95. I covered half at current prices. A P/E of 14-17 is not going to happen...no one even knows what the "E" is. $7 is probably top of the mark for 2013. A write-down of goodwill on Bucyrus is fairly likely at this point given what is going on in mining. I see no reason to be long this stock right now. Whatever you make in the dividend will be more than wiped out with the stock going down. Don't fall in love with a stock because you think it is a good long term hold...you can get smoked in the interim. I would consider going long around $60.
Says nothing about the rate of cash burn. I believe they will get current on their filings and will muddle along for a while. I have a tiny position in the stock and likely will not add to it. You are correct in that it is very risky, but I think you are over-extrapolating based on what little data we do have.
Can Windstream Maintain Its Ample Dividend Yield? [View article]
Frontier Communications: Customer Losses Continue [View article]
Q1 was pretty bad for WIN from a cash flow basis. They took in $305M (down from $439M in 2012) in cash from operations and spent $235M on that cash for cap ex and other investing activities, leaving only $70M for the dividend. Unfortunately that dividend cost $148M, so they had to borrow the rest. The share count was up again the quarter, adding to the dividend bill. The dividend here looks completely unsustainable considering the high amount of debt. They would be wise to cut it in half while they attempt this transformation. FTR has plenty of excess cash flow to pay down debt. Their revenues aren't gonig to zero. Their business model is sustainable IMO. I'd much rather but it than WIN.
Frontier Communications Has A Serious Revenue Problem [View article]
Is Windstream The Next Dividend Death Trap? [View article]
Frontier Communications First Quarter Earnings Preview [View article]
If a company cuts costs at or near the decline in revenues, operating income stays about flat. No worries.
Most of FTR's debt is trading well in excess of par, about 110. If a company is in "dire straights" their debt does not trade at this level.
You are correct that they are refi'ing debt, at higher rates because the maturities are much farther out than the debt they are retiring. Again, no worries.
Yes they will take a loss for tendering a bunch of debt during Q2 in excess of par. I need to look at the callable features of the rest of their debt - it must not be callable at par since most of their outstanding maturities are, again, trading well in excess of par. They will likely have even more cash at the end of Q1 and even more at the end of Q2 unless they tender for some more debt. They don't have any debt maturities until 2014, at that is only $200M. I don't know what they are going to do with all this cash. They ran the biz just for for a year or so with only $300M in cash, now they have like $1.5B in cash.
I'm not worried. If you are, it is likely you don't fully understand accounting and the bond market.
Is Windstream The Next Dividend Death Trap? [View article]
Frontier Communications First Quarter Earnings Preview [View article]
Lee Enterprises's Revenue Is Starting To Stabilize [View article]
OCZ: Game Over! [View article]
OCZ: Game Over! [View article]
OCZ: Bankruptcy Within 6 Months? [View article]
Intel Making Apple's ARM Chips Will Leave Samsung Behind [View article]
Why Caterpillar Shares Could Drop To $50 And Still Be Fairly Valued [View article]
Why Caterpillar Shares Could Drop To $50 And Still Be Fairly Valued [View article]
OCZ: Bankruptcy Within 6 Months? [View article]