) reported mixed financial results for the second quarter of
2013. The results were influenced by well performing broadband,
Prism TV and data hosting units, supported by growing demand from
business customers for high bandwidth data service and low
operating expenses. These were partially offset by decreased
legacy service revenues, which were impacted by access line loss
and lower access revenues.
The company posted quarterly adjusted earnings of 69 cents per
share, beating the Zacks Consensus Estimate of 67 cents.
Comparing with the prior-year quarter, the results improved 6.2%
from 65 cents.
Quarterly revenues of $4,525 million were marginally below the
Zacks Consensus Estimate of $4,530 million. Revenues fell 1.9%
from $4,612 million in the second quarter of 2012.
During the previous quarter, CenturyLink restructured its
operating segments into four reporting units - Consumer,
Business, Wholesale and Data Hosting services.
revenues declined 3.0% year over year to $1,494 million in the
second quarter. The legacy business was hampered by the impact of
Access Recovery Charges. This was mainly responsible for the
decline. The segment registered Prism TV subscriber growth of
revenues were $1,525 million in the second quarter, down by 0.8%
from second- quarter 2012. The company's strength in
high-bandwidth offerings were weakened by declining legacy
segment generated revenues of $910 million in the second quarter,
down 3.8% from the prior-year quarter. The drop was due to
reduced access rates and lower long distance and switched access
minutes of uses. The company completed over 1,150 fiber builds in
the quarter and is on track to cover 4,000 to 5,000 fiber builds
throughout the year.
revenues increased 7.4% year over year to $347 million, driven by
growth in managed hosting along with colocation services.
At the end of the second quarter, total access lines were
13.331 million compared with 14.149 million in the year-earlier
period. CenturyLink lost nearly 8,400 high-speed Internet
customers during the quarter, bringing the total to 5.909 million
(up 2.5% year over year).
CenturyLink exited the quarter with $214 million of cash and
cash equivalents compared with $211 million at the end of 2012.
Long-term debt increased to $20,283 million from $19,400 million
at 2012 end. The company generated operating cash flow of $1,858
million in the quarter, while free cash flow was $703
As of Aug 6, the company bought back 29.0 million shares for
approximately $1 billion under the authorized new share
For the third quarter of 2013, the company expects earnings
and operating revenues of 59 cents to 64 cents and $4.50 billion
to $4.55 billion, respectively. Operating cash flows are expected
between $1.79 -$1.83 billion.
For full-year 2013, CenturyLink expects revenues of
$18.05-$18.20 billion, reflecting a drop of 1% to 1.8% from the
last year. Adjusted EPS is expected in the range of $2.63 to
$2.73. Operating cash flows will likely be $7.35 billion to $7.50
billion, while capital expenditure is expected to be about $2.9
billion to $3.0 billion.
Another telecom company,
), reported second-quarter results on Aug 7, 2013, after the
market closed. The company's adjusted earnings of 6 cents were in
line with the Zacks Consensus Estimate of 6 cents.
CenturyLink - which has business tie-ups with
Verzion Communications Inc.
) - has a Zacks Rank #3 (Hold).
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 the launch of Prism TV in new markets.
However, stiff competition from low-cost telecom operators
LEAP Wireless International Inc.
), deteriorating legacy voice and access revenues, regulatory
issues and constant need for technology upgrades may impact the
company's operating performance.
CENTURYLINK INC (CTL): Free Stock Analysis
FRONTIER COMMUN (FTR): Free Stock Analysis
LEAP WIRELESS (LEAP): Free Stock Analysis
VERIZON COMM (VZ): Free Stock Analysis Report
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