Aside from another fat paycheck for CTL's investment bankers, the decision to cut the dividend while buying back $2 B in shares is the most asinine I have seen in 35 years.
The $2B for the buyback could have paid the $2.90 dividend for over the next three years.
People but mature Telecom stocks not for growth, especially when sales have been in a steady decline, but rather for dividends!
Any smuck would know that!
You don't take a company founded in Marion, LA with population less than 250 people, and make it a Fortune 100 Company by making Asinine decision. I'm not sure why, but I can promise you they didn't make this without some long-term reason. As soon as Obama's economy crashes the market everyone will be back buying CTL. Just wait and see.
Sentiment: Strong Buy
to you r a moron. Think outside the box. You want to buy back 2B but stock is a touch high so you also announce the div cut...win win!
go long in 2008 which is it...did you buy at $32.31 or did you buy at $31.15? big difference dude.
Bought at 32.31....
Look...If I had owned the stock at 42 I'd be #$%$ too...But I didn't. Thought the dividend was way too high based on FCF and the leverage they were using to pay it. Notice no net earnings of any consequence to justify THAT price.
But now the stock is 32. They took the right action. The dividend at 32ish is over 6.6%. Still one of the highest dividend payers in telecom if not the highest. It's a great buy at this level IMHO.
Stock should trade back to 36-38 within the next 9 months. In the meantime 6.6% ain't bad.
Sorry for those who bought higher and are deep in the hole but it should come back. In the meantime,
enjoy the dividend!
"You want to buy back 2B but stock is a touch high so you also announce the div cut...win win! "
Big win for who? Shareholders took a 23% hit!
CTL exces get lower priced options and their gease ball bankers make hefty commissions for themselves on the buyback.
You are either CTL IR or a SFB moron!
I have a hard time coming up with anything more asinine. I feel like we were lead down the garden path by management, so we would bid up the shares due to the high dividend and today they pulled out the rug. It also doesn't make sense on one hand to cut the dividend and use that for a $2 B buyback?
I think it was brilliant. Reduce the dividend so new purchasers like myself who just paid 31.15 will get a 6.7% dividend...Only slightly less than the 7% holders at 41 were getting yesterday. Do a stock buy back with the dividend savings to have less shares outstanding so earnings go up. Reduce leverage knowing interest rates will be going up...not down in the future. Have 60% of the current divy actually covered by FCF. Stock wasn't going up much because of the big dividend anyway. Very conservative and well thought out longer plan IMHO. Have any of you folks here taken Econ 101
or Accounting !A? Learn before you criticize.
PS...Their business is far from "broken" FCF was huge.
ya...that's all we need, more attorneys muddling it up. I can see it now "call 1-800 so n so if you've been wronged by CTL so I can make millions and you an 1/8th of a penny per share"! I'll pass thank you.
As you noted, the buy back will only provide temporary support and a fat paycheck for the bankers who probably duped CTL management into the deal.
CTL has destroyed its credibility with investors and it will take a long time to get it back.
do you think they really care. i wonder how many of them and their friends bailed out before the announcement? Personally, they are a dishonest bunch of executives and they don't care what anybody thinks as long as they and their friends make money. I hope the company goes bankrupt and if they are caught in anything dishonest I hope they go to prison and rot.