CenturyLink Inc . ( CTL ) reported mixed
first quarter 2013 results, owing to well performing broadband,
Prism TV and data hosting units supported by growing demand from
customers and low operating expenses. These were partially offset
by access line losses and dull legacy services.CLEARWIRE CORP (CLWR): Free Stock Analysis
ReportCENTURYLINK INC (CTL): Free Stock Analysis
ReportLEAP WIRELESS (LEAP): Free Stock Analysis
ReportVERIZON COMM (VZ): Free Stock Analysis ReportTo read this article on Zacks.com click here.Zacks Investment
The company posted quarterly adjusted earnings of 76 cents per
share, beating the Zacks Consensus Estimate of 69 cents. Comparing
with the prior-year quarter, the results improved 11.8% from 68
Quarterly revenues of $4,513 million failed to meet the Zacks
Consensus Estimate of $4,524 million. However, revenues fell from
the first quarter 2012 mark of $4,610 million.
Effective first quarter, CenturyLink restructured its operating
segments into four reporting units - Consumer, Business, Wholesale
and Data Hosting services.
Consumer revenues declined 3.4% year
over year to $1,511 million in the reported quarter. Slowdown in
the legacy business was mainly responsible for the decline. The
segment registered Prism TV subscriber growth of over 13,400.
Business revenue was $1,504 million in
the first quarter, almost unchanged from the prior-year quarter
figure. The company's strength in high-bandwidth offerings was
weakened by a drop in legacy services and data integration
Wholesale segment generated revenues of
$907 million in the reported quarter, down 5.7% on a year-over-year
basis. The plunge was fueled by the introduction of reduced access
rates. The company completed over 800 fiber builds in the quarter
and is on track to cover 4,000 to 5,000 fiber builds throughout the
Data Hosting revenue increased 7.7% year
over year to $334 million, driven by growth in managed hosting
along with colocation services.
At the end of first quarter, total access lines were 13.558
million compared with 14.379 million in the year-earlier period.
CenturyLink added nearly 66,700 high-speed Internet customers
during the quarter, thus bringing the total to 5.915 million (up
2.9% year over year).
CenturyLink exited the quarter with $476 million of cash and cash
equivalents compared with $211 million at the end of 2012.
Long-term debt increased to $19,595 million from $19,400 million at
year-end 2012. The company generated operating cash flow of $1,397
million in the quarter, while free cash flow was $1,006
As of May 7, the company bought back 19.2 million shares for $682
million under the authorized new share repurchase program.
For the second quarter of 2013, the company expects earnings and
operating revenues in the range of 63 cents to 68 cents and $4.49
billion to $4.54 billion, respectively. Operating cash flows are
expected to range between $1.82 billion and $1.86 billion.
For full-year 2013, CenturyLink expects revenues in the range of
$18.1-$18.3 billion, reflecting a drop of 0.5% to 1.5% from the
last year. Adjusted EPS is expected in the range of $2.60 to $2.75.
Operating cash flows will likely be in range of $7.35 billion to
$7.55 billion, while capital expenditure is expected to be about
$2.8 billion to $3.0 billion.
CenturyLink - which has business tie-ups with Verzion
Communications Inc. ( VZ ) - has a Zacks Rank
#3, implying a Hold rating.
With a reformed operating base, we expect the company to perform
impressively in the coming months backed by broadband expansion,
completion of fiber builds, better cloud computing services and
launch of Prism TV in new markets.
However, stiff competition from other low-cost telecom operators
like LEAP Wireless International Inc. ( LEAP ) and
Clearwire Corp. ( CLWR ), regulatory
issues coupled with the constant need for technology upgrades may
impede the company's operating performance going forward.