Frontier Communications Corp (NASDAQ:FTR) started this week on a strong note, however, it failed to build on its gains, and has been trading subdued from last couple of sessions. FTR has been a stock that has managed to keep the dividend going. Some state it’s unsustainable, but then there are others that believe nothing major is there that indicates an imminent cut. The company has delivered, still the stock has been a mess.
The buzz
The performance has been gradually declining for Frontier so there is a cause for concern. This growth worries are not only short-term, which the shares price indicates, but even for long-term. It is not clear as to where the firm is going and hence caution must be taken.
As of now, the dividend distribution is safe. The firm just reported a $0.105 per share disbursement, in line with last payouts. Analysts consider the payout as secure till the time revenues don’t drop off considerably. They have been stressed of course, led by customer churn and the shares has responded by declining in tandem with clients.
The client count is definitely impacting things. Provided the acquisitions closed, it cannot be known from the headlines. Frontier posted revenue of $2.4 billion, operating income margin came at 10.6% and operating income stood at $255 million. Both income and revenues were down QoQ. With the advancement of the firm, direct YoY comparisons are complex, still revenue surged 70% over last year.
The problem is there cannot be winning investments when revenues decline every quarter. It is just worrisome. The report missed analyst projections for revenues by $100 million. Margins and operating income came positive. However, when considered with expenses, net loss was $133 million or $0.12 a share. This is a GAAP number, so it may not be completely as informative as investors would like.
