) reported mixed fourth quarter and full-year 2012 results,
reflecting strong contributions from broadband, Prism TV,
fiber-to-the-tower and data hosting units along with high demand
from customers and low operating expenses. These were partially
negated by losses in access line and poor performing legacy
The company posted quarterly adjusted earnings of 67 cents per
share, missing the Zacks Consensus Estimate by a penny. Comparing
with the prior-year quarter, the results improved 21.8% from 55
Quarterly revenues of $4,583 million surpassed the Zacks
Consensus Estimate of $4,581 million. However, revenues fell from
the fourth quarter 2011 mark of $4,653 million.
For full-year 2012, CenturyLink posted earnings per share of
$2.67 (in-line with our projection and up 1.1% year over year).
Revenues increased 19.7% year over year to $18,376 million.
revenues declined 3.9% year over year to $2,445 million in the
reported quarter. Slowdown in the legacy business was mainly
responsible for the decline. The segment registered Prism TV
subscriber growth over 10,000.
revenue was $908 million in the fourth quarter, down 5.5% year
over year, primarily due to lower copper based revenue. Further,
implementation of the CAF (Connect America Fund) rate reduction
also impacted the segment result.
Enterprise Markets - Network
generated revenues of $671 million in the reported quarter, up
5.7% on a year-over-year basis. The growth was fueled by
high-bandwidth offerings and data integration revenues.
Enterprise Markets - Data Hosting
revenue increased 12.7% year over year to $292 million, driven by
growth in managed hosting, cloud services, colocation alongside
financials and consumer solutions.
At the end of 2012, total access lines were 13.748 million
compared with 14.584 million in the prior year. CenturyLink added
nearly 41,000 high-speed Internet customers during the year, thus
bringing the total to 5.848 million (up 3.5% year over year).
CenturyLink exited 2012 with $211 million of cash and cash
equivalents compared with $128 million at the end of fiscal 2011.
Long-term debt decreased to $19,400 million from $21,356 million
at year-end 2011. The company generated operating cash flow of
$7,656 million in 2012, while free cash flow was $3,332 million.
Management authorized a new share repurchase program of to an
aggregate $2.0 billion through open market transaction. The
program is expected to be completed by the Feb 13, 2015.
CenturyLink also plans to trim its quarterly dividend rate by
25.5% to 54 cents from 72.5 cents per share. The new rate will
likely be approved in a meeting on Feb 26, and be effective from
the March dividend payout.
For the first quarter of 2013, the company expects earnings and
operating revenues in the range of 67 cents to 72 cents and $4.46
billion to $4.51 billion, respectively. Operating cash flows are
expected to range between $1.83 billion and $1.88 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 $2.50 to
$2.70. Operating cash flows will likely be in range of $7.3
billion to $7.5 billion.
Other stocks worth considering within the sector are
RF Micro Devices Inc
) - that carries a Zacks Rank #1 (Strong Buy),
Ruckus Wireless Inc.
). Both hold a Zacks Rank #2 (Buy).
CenturyLink has a Zacks Rank #3, implying a Hold rating. We
believe that the company is making significant progress in key
areas like broadband expansion, completing fiber builds, cloud
computing and Prism TV, which are expected to improve
profitability over the coming quarters.
CLEARWIRE CORP (CLWR): Free Stock Analysis
CENTURYLINK INC (CTL): Free Stock Analysis
RF MICRO DEVICE (RFMD): Free Stock Analysis
RUCKUS WIRELESS (RKUS): Free Stock Analysis
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