Entering text into the input field will update the search result below

Verizon Hurting Dycom (DY, VZ)

Aug. 31, 2005 11:33 AM ETDY, VZ, BLS
Inventing Money profile picture
Inventing Money

As I wrote yesterday, says "Slash", a professional investor with experience on both the buy-side and sell-side, DY lowered numbers for next quarter due to expected lower volumes from VZ FTTH build. DY actually missed numbers on the EPS line also for last quarter, without the $3M accounting gain from some insurance cost amortizations which helped EPS by 4 cents I believe. Its always nice to have some "cookie-jar" accouting to play with during weak quarters.

DY suffers from being at the wrong place-literally. There is nothing wrong/slowing with VZ plans, its not slowing spending. But being a 28% customer VZ has consequences for DY. When VZ shifts its build plans from one state/municipality to another it might not always be beneficial for DY. DY gained earlier in the rollout as VZ started its FTTH build out in areas where DY was the contractor, also DY benefitted earlier in the rollout since it basically does more of the fiber-laying part of the build and does not really have much work when it comes to doing network engineering (splicing fiber, etc.). So as the buildout evolves and moves into other states and also into higher-level work, DY suffers. On the other hand, BLS is actually accelerating its buildouts with DY which help offset some of the losses from VZ.

As I indicated earlier, gross margins are declining because volume of work from VZ declined very quickly and with lower revenues the overhead absorption hurts gross margins. Do not expect margins to tick up anytime soon. Pricing seems like it was not the culprit this time.

It's never a positive sign when backlog declines sequentially and its especially bad when revenues declined also. Backlog declined from $1.137B from $1.236B from Q3, with $551M to be completed in next 12 months.

DY commented

This article was written by

Inventing Money profile picture
Inventing Money is authored by a financial professional who uses the pen name 'Slash'. The purpose of his blog is "to bring a different perspective to the daily hustle of the market. Making money while doing so would also be a good thing."

Recommended For You


Disagree with this article? Submit your own. To report a factual error in this article, . Your feedback matters to us!

Related Stocks

SymbolLast Price% Chg
Dycom Industries, Inc.
Verizon Communications Inc.
BellSouth Corp.

Related Analysis

To ensure this doesn’t happen in the future, please enable Javascript and cookies in your browser.
Is this happening to you frequently? Please report it on our feedback forum.
If you have an ad-blocker enabled you may be blocked from proceeding. Please disable your ad-blocker and refresh.