since there some who keep stating frp will fail (and the large short amount prove some people are willing to bet on it...), here are some numbers (as I see them in the reports): revenue (I will use a stabilized number as per the expectations that ip services will compensate for old generation voice shrinking at 1.5%/q).
These are the numbers that as of today will be the 2012 average per quarter. a few notes: 1. even the regulators see that an elevated level of capex like that will demage the company, so they are starting to assist the company in getting a more fair starting point in the market. 2. These numbers assume elevated capex as the norm. it is not the case. 3. if you deduct old fairpoint out of the above, the numbers in nne are scary (op. expenses as a percentage of revenues) and leave a lot room for improvement. anyone can see that... the more the company will focus on ip and business the less employees will be needed. sad, but also a fact of life. 4. in case the union will stretch their muscles they will find out that in case of liquidation of a regulated utility they will be just as unsustainable as were before. fact of life. 5. if you change the number for when the regulatory projects are done as follows: revenue = $243,000,000 op. expense = $175,000,000 interest = $ 16,250,000 amortization of loan = $ 2,500,000 vaccation = $ 3,500,000 capex (elevated levels) = $ 20,000,000 cash contributions pension & opeb = $ 10,000,000 ------------------------------------------ net cash flow = $ 15,750,000
That is with taking into account little improvement and having the ip investments only compensating for voice loss and no growth. in this case, $63M/year is the minimum that frp will be generating as free cash flow after everything. The leverage in frp makes it more risky, but the ability to generate significant amounts of cash to reduce debt exist here. The next two years will say who was right. so far, it seems the initial signs say the company is on the right way. good luck to all.
And one more thing I forgot to mention: one point most people here who are bearish about are talking about are the politics and inept management in the field for frp (legacy of mama bell / verizon). I fully appreciate these things as I work in a company that, at times, can be as frustrating as I see people here feeling. one thing you have to keep in mind that every organization gets to be partly disfunctional at a certain size. as much as I would have loved to be able to say that it would drastically change, I expect that both frp and its competitors will not get much better any time soon. its amazing, but its possible to make profitability long term while being like that... good luck to everyone here, agreeing with me or not.