Will the Last Analyst Leaving CenturyLink Please Turn Out the Lights?

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Hand plugging ethernet cable into wall socketCenturyLink Inc. (NYSE: CTL) is in serious trouble, with shares hitting a 52-week low. Shares are down more than 20% on Thursday, yet still worth almost $21 billion in market capitalization. The Louisiana-based telecom and communications provider announced that it was lowering its dividend payments by about 26%. We would ask that the last Wall St. analyst to leave the room here please turn out the lights.

The dividend payout each quarter is dropping, down to $0.54 per share from $0.725 per share. This is on the heels of lackluster earnings for its fourth quarter. The company posted adjusted earnings of $0.67 per share on revenues of $4.58 billion. Earnings were deemed soft, but sales were basically on the mark.

Enterprise network market revenues rose by 5.7% to $671 million, and enterprise data hosting rose by 12.7% to $292 million. The problem is that its Wholesale Markets revenue was down 5.5% to $908 million in the fourth quarter. Another issue is that the larger Regional Markets revenues fell 3.9% year-over-year to $2.445 billion.

Guidance was put at $0.67 to $0.72 per share and $4.46 billion to $4.51 billion for the first quarter. The 2013 outlook was put at a drop of 0.5% to 1.5% to $18.1 to $18.3 billion, with earnings of $2.50 to $2.70 per share.

Management's new share repurchase program of up to $2.0 billion is just not enough to move the needle. The company ended 2012 with $211 million in cash and equivalents.

We would note that the new dividend yield is now almost 6.6% after the drop of 20% in the stock to $32.95. The prior 52-week range was $36.52 to $43.43. So, here is that list of downgrades we have seen today from Wall St. research shops:

  • Ameriprise Financial downgraded CenturyLink to Sell from Buy.
  • Citigroup cut it to Neutral from Buy.
  • J.P. Morgan cut it to Neutral from Overweight.
  • Macquarie cut it to Underperform from Neutral.
  • Nomura cut it to Reduce from Buy.
  • Raymond James cut it to Market Perform from Strong Buy.

Will the last analyst leaving this room please turn out the lights?


Filed under: 24/7 Wall St. Wire, Analyst Calls, Dividends & Buybacks, Telecom & Wireless Tagged: CTL, featured
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