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whereisdagnytaggart

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  • AT&T: Compelling Even Without Growth [View article]
    Taken from Moody's Credit Opinion Report for AT&T:

    "AT&T's high dividend continues to pressure its capital structure and consume almost all of its residual cash flow after capex. We expectfree cash flow after dividends to remain weak in 2014 and 2015 as capital investment is flat and cash taxes rise. This weakness may attract equity market scrutiny on the dividend payout ratio and Moody's believes this may drive management to issue debt to support the stockprice - either to fund M&A or aggressive share repurchase. However, the current A3 rating will not accommodate incremental leverage,especially given the aforementioned weak near term cash flow metrics.AT&T's underlying A3 senior unsecured rating reflects its scale and its resilient and well-diversified operating cash flow. The rating is also supported by AT&T's dominant position as the #1 or #2 operator in nearly all of the key segments in which it competes. Growth has beendampened in recent years due to maturing markets, the disruptive effect of evolving technology and macroeconomic weakness. Yet, AT&T has maintained the willingness and ability to invest in an asset base which has solidified its market position and which most rivals cannot match.AT&T plans to buy DirecTV Holdings LLC for about $48.5 billion in cash and stock, plus the assumption of DirecTV's $18.6 billion in netdebt. The potentially transformative deal is credit negative for AT&T because it will lead to higher capital intensity and increased businessrisk. Following the announcement, we placed AT&T's ratings on review for downgrade. Acquiring DirecTV, a national provider of pay TV, will complicate AT&T's US strategy. The post-merger company will seek to leverage awide range of assets and last-mile access technologies to address the consumer market. But most of AT&T's access links will remainbandwidth-constr... connections, including DSL, satellite and cellular. Meanwhile, the deal's financing burden could limit AT&T'sability to invest in direct-fiber connections, which we believe is the proven, high-capacity access vehicle of the future. AT&T will also needto continue to invest in its core wireline and wireless businesses while integrating DirecTV's satellite network into its operations.The acquisition will temporarily raise AT&T's financial leverage to an adjusted 2.7x debt/EBITDA, although we expect it to revert towardsits current level of 2.5x by year-end 2017 absent any additional levering transactions. But the company's free cash profile is unlikely to similarly improve. Post-deal, we expect AT&T to generate free cash flow after dividends of less than 2% of total adjusted debt. Similarly rated companies typically generate free cash flow of around 10% of adjusted debt. The capital intensity of AT&T's core operations, itsgrowing cash tax obligation and the higher dividend payments from shares issued to acquire DirecTV will consume almost all of the company's cash from operations.With more than $100 billion of debt outstanding, AT&T will be dependent on the capital markets to meet debt maturities or makestrategic investments. Any tactical missteps, shifts in market dynamics (especially within the wireless market) or deterioration in operatingperformance, even if minor, could result in negative free cash flow. AT&T's high dividend payout consumes almost all of its internally generated cash flows after capex and has begun to attract scrutiny byequity market participants regarding its sustainability. The dividend payout represents a large portion of AT&T stockholders' total returnexpectation. Because of the high dividend yield and low organic earnings growth potential, we view AT&T's stock as somewhat bond-like,with a tight relationship to interest rates (i.e. high duration). Therefore, we feel that management has a strong incentive to protect thedividend. Further, we believe that persistent low interest rates will naturally drive higher leverage tolerance for rational capital allocators...."
    Sep 12, 2014. 08:58 PM | 2 Likes Like |Link to Comment
  • High-Yielding AT&T Is Making Me Anxious [View article]
    Goodbye billy goat! I am sorry you were unable to oust me from this bridge! I look forward to your fallacies in the future!
    Jul 8, 2014. 03:13 PM | Likes Like |Link to Comment
  • High-Yielding AT&T Is Making Me Anxious [View article]
    If the sources of my information are incorrect then you will have to blame att.com, sec.gov, and Moodys.com. Perhaps they can use a cpa of your caliber to disclose correct information to the public.
    Jul 8, 2014. 02:49 PM | Likes Like |Link to Comment
  • High-Yielding AT&T Is Making Me Anxious [View article]
    Mr. Myung,

    Have you personally reviewed AT&T's financial reports?
    Jul 8, 2014. 02:41 PM | Likes Like |Link to Comment
  • High-Yielding AT&T Is Making Me Anxious [View article]
    Good Morning Mr.Myung,

    First and foremost, I would like to thank you for addressing my question directly. Secondly, I personally would not consider $10 a lot. I also would not consider AT&T's $100 billion in debt an equivalent to a $10 debit balance on a credit card. Now if you said AT&T was expecting to make $1.10 this year (not including dividend payments to shareholders for about $.90 so let's adjust that number to $.20) then yes I would say a $10 balance on a credit card is a lot. Am I incorrect in my assumption?
    Jul 8, 2014. 01:12 PM | Likes Like |Link to Comment
  • High-Yielding AT&T Is Making Me Anxious [View article]
    Kudos to you cpa28761 on your accomplishments! One of my very reasons for engaging conversation on Seeking Alpha is to learn from wizened and educated men and women such as yourself. Although I hold no certifications or designations and licenses in the field of accounting I do believe I am entitled to an opinion, however, if you are willing and able to change that opinion with logic I would love to be enlightened :) so with that said (: Your argument from authority, while breathtaking, still proved to be fallacious in nature and straying away from the topic at hand.
    Jul 8, 2014. 12:13 PM | 1 Like Like |Link to Comment
  • High-Yielding AT&T Is Making Me Anxious [View article]
    "AT&T's free cash flow profile will remain weak following the acquisition, although leverage could revert to its current level by year end 2017. Moody's anticipates that AT&T will generate free cash flow after dividends of less than 2% of total debt (Moody's adjusted) following the DTV acquisition. The capital intensity of AT&T's core operations, its growing cash tax obligation and the higher dividend from shares issued to acquire DTV will consume almost all of AT&T's cash from operations. With over $100 billion of debt outstanding, AT&T will be dependent upon the capital markets to meet debt maturities or make strategic investments.
    Any tactical missteps, shifts in market dynamics (especially within the wireless market) or deterioration in operating performance, even if only minor, could result in negative free cash flow, a factor Moody's deems inconsistent with an A-rated company. Also, AT&T could continue to face equity market scrutiny related to its high dividend payout following the transaction, which could influence the company to pursue shareholder friendly actions." - http://bit.ly/1lQYaJc
    Jul 8, 2014. 10:48 AM | 1 Like Like |Link to Comment
  • High-Yielding AT&T Is Making Me Anxious [View article]
    If the high schools in my city provided courses on how to read financial statements I would be amazed! Do high schools provide that sort of curriculum these days?!? You did avoid the first question and I disagree that debt has nothing to do with earnings, however, I thank you nonetheless for your time!
    Jul 8, 2014. 09:48 AM | 1 Like Like |Link to Comment
  • High-Yielding AT&T Is Making Me Anxious [View article]
    Thank you for your response cpa28761. A) Is the cost of doing business not a factor used in determining earnings? B) $4 Billion in my opinion is alot of money. Is anyone else concerned about AT&T's debt levels?
    Jul 7, 2014. 10:26 PM | Likes Like |Link to Comment
  • High-Yielding AT&T Is Making Me Anxious [View article]
    I do not believe he will be successful in the long term focusing on the "stock". I have voiced concerns to others about AT&T's ability to meet its debt obligations. Do you believe the debt that is maturing this year ($4 Billion) and early next year will impact near term earnings and share price? If not, why?
    Jul 7, 2014. 08:14 PM | Likes Like |Link to Comment
  • High-Yielding AT&T Is Making Me Anxious [View article]
    Time tested does not mean factual my friend. "Appeal to Tradition Fallacy" http://bit.ly/1j9Jj1Q
    Jul 7, 2014. 07:33 PM | Likes Like |Link to Comment
  • Sell Oracle After Disappointing Results [View article]
    Do you know how much money Oracle makes off of Java? I am a Computer Science major and it is one of the most prominent programming languages in use today so I was always curious.
    Jun 20, 2014. 05:25 PM | Likes Like |Link to Comment
  • AT&T: Compelling Even Without Growth [View article]
    Robert, love the site!
    Jun 20, 2014. 10:31 AM | 1 Like Like |Link to Comment
  • AT&T: Compelling Even Without Growth [View article]
    F.A.S.T, I appreciate your response. I've been on the fence about initiating a position in AT&T the yield is attractive I just don't know if it or the current price is sustainable. Do you know if the estimates of $14 billion in net income are including the maturing of approximately $4 billion in debt later this year? (Leap, BellSouth, SBC) If not, I'm assuming the earnings estimate should be corrected to about $2 a share all other variables held constant. The dividend paid to shareholders is $1.84 per share. In this scenario that would leave $800 million in retained earnings or .16 a share. The stock is currently trading at a multiple of 13.5x. Am I wrong in assuming a price correction?

    http://soc.att.com/1no...
    Jun 20, 2014. 10:26 AM | Likes Like |Link to Comment
  • AT&T: Compelling Even Without Growth [View article]
    Upon reviewing their 2013 annual report I noticed that AT&T's net income was $18 Billion in comparison to their 2012 net income of $7 Billion and 2011 net income of about $4 Billion. The majority of the disparity was found in AT&T's Selling, General and Administrative expenses dropping by about 31% in 2013 in comparison to recent years. Are you concerned by that sudden change? Also, are you concerned with Moody's recent review of AT&T's long term ratings and their possible downgrade? Lastly, do you feel AT&T's dividend is safe despite their climbing debt levels and the assumption of DirecTV's debt going forward?
    Jun 18, 2014. 09:23 PM | 2 Likes Like |Link to Comment
COMMENTS STATS
39 Comments
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