Why NII Holdings Shares Tanked
Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.
What: Shares of Latin American telecom NII Holdings have lost over 9% today after the company provided weak revenue estimates for its 2013 fiscal year.
So what: Analysts had been looking for $6.1 billion in annual revenue, but today's guidance fell well below that mark, as NII projects it will generate between $5.7 billion and $5.9 billion on the top line this year. A relatively lowball estimate of mid-single-digit subscriber growth from the current 11.4 million total didn't impress the Street, either -- at 5% growth, that brings the total up to 12 million, which would be a little less than the 650,000 net subscribers added in 2012. Slowing growth is not a good sign.
Another report that NII was planning to raise an additional $400 million in debt offerings did nothing for the market, which is growing impatient with NII's tough uphill battle against Latin American telecom leaders America Movil and Telefonica.
Now what: There are many telecoms on the market that provide both a large, stable customer base and a large, stable dividend. NII offers neither, and despite its rock-bottom share price (the lowest in nearly a decade), NII has offered no clear path forward for investors. If you're looking for a telecom turnaround story, this doesn't look like the one to stand behind.
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The article Why NII Holdings Shares Tanked originally appeared on Fool.com.Fool contributor Alex Planes has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.
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