Terrafugia STEM Presentation


Carl Dietrich, CEO/CTO, and Anna Dietrich, COO, were honored to assist Governor Deval Patick in promoting the science initiative in public schools as keynote speakers at the 10th annual Massachusetts STEM Summit. Video below:

For more in depth reporting on the company click here for IIEX articles on Terrafugia

 

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How Safe Is Windstream’s Dividend?


Our first article on Windstream (WIN) concluded:

Waiting to see how the second half develops may be the prudent path before allocating new or additional cash toward this investment.

The day the article was published Windstream closed at 11.27. While dividends have been sustainable there are dark clouds putting downward pressure on the stock price which included the uncertainty of future cash taxes, revenue growth not as robust as investors hoped and a high leverage ratio. Our last article which brought us through the first half of 2013 concluded:

Management can sustain the dividend for several years given the current revenue and customer trends provided management can accept a high FCF payout and leverage ratios. In the meantime the challenge is to reverse the overall revenue trend which will pull the ratios toward more acceptable levels.

Question is has anything changed for better or worse now that we have 2014 guidance and additional insight on future cash taxes?

This article examines:

  • Revenue trends based on results and guidance; both used to project financials, more importantly free cash flow on.
  • Risks
  • Final thoughts

REVENUE TRENDS & FREE CASH FLOW

Windstream recently released fourth quarter and full year results providing the 2014 outlook and cash tax guidance through 2015. The trends through the first half of 2013 are shown with the recent trends to get an idea whether they are improving or not.
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Has Frontier Communications Turned The Corner?


The key for Frontier Communications (FTR) turning the corner is to show improvements in revenue trends which ripple through the financials affecting free cash flow and by default the safety of the dividend.  Let’s face it investors in Frontier are not investing for growth but the high yield. Frontier recently released fourth quarter and full year results and announced the acquisition of AT&T’s (T) Connecticut assets in December.  So what might the future hold based on these events? 

This article examines:

  • Revenue trends based on results and guidance used to project financials, more importantly free cash flow on a standalone basis.
  • Overlaying projections and guidance for AT&T’s Connecticut assets to the financials on a standalone basis to complete the picture.
  • Risks
  • Final thoughts

REVENUE TRENDS

Business Revenue: Business trends are based on comments by the CEO – Maggie Wilderotter on the Q3 conference call:

This quarter, we achieved stability in small business revenues for the first time since 2010. Carrier excluding wireless backhaul and small, medium and enterprise, improved over second quarter results. The one remaining headwind is our wireless backhaul revenue decline, but that was anticipated. Once we fully work through the transition in wireless backhaul during the first half of 2014, we expect the business segment to be well positioned to deliver sustainable sequential revenue growth. After three solid quarters of revenue improvement, we believe we have turned the corner in successfully mitigating revenue decline and in moving closer to our objective of growing revenue.

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Is Level 3 Communications Taking Advantage Of The Opportunity Laid Before It? – Part 2


Our November 2013 article, “Can Level 3 Communications Take Advantage Of The Opportunity Laid Before It?”,  we examined past and future growth of the internet and how this could be a catalyst Level 3 Communications (LVLT) was built for.  Some topics discussed were:

  • Company background
  • Catalysts fueling future demand
  • Data from several internet studies
  • Valuation and risk

Instead of repeating the above topics which would make this article exorbitantly long it’s recommended you read it for a better understanding, although not mandatory for this article.  This article is a follow up examining level 3’s results and guidance to see if there is evidence Level 3 is capitalizing on the growing need for bandwidth.

Level 3 announced fourth quarter results and issued 2015 guidance on February 5, 2014. Ongoing trends based on management’s record and guidance will be a strong indicator of management’s success (or lack thereof) of converting opportunity into growing profits and cash generation.  This article discusses the following:

  • Revenue and focus
  • Trends
  • Valuation revisited
  • Risks
  • Final thoughts

REVENUE & FOCUS:

It’s important to understand how Level 3 reports revenue and their revised focus aimed directly at the opportunities ahead. This also will make clear why some missed the underlying growth momentum buried among other revenue categories; becoming more obvious with each earnings announcement leading some analysts to dramatically boost price targets.
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What Is Apple’s Stock Worth?


In February 2012 when Apple (AAPL) was trading around $440 we published an article titled “Apple Is Still A Bargain, Likely Headed Past $500”. The $500 barrier was broken by the end of the month and the stock soared to $700 only to return to the $500 level over the next year and a half.  Why? Growth projections for Apple in all categories by analysts (and this author) turned out to be too optimistic.  An example can be taken from the above article:

A key question is whether the iPhone market is starting to mature, or whether there is continued growth ahead. We’ve put together a market projection based on a recent interview with Kulbinder Garcha of Credit Suisse and a Gartner market projection. We’ve combined these forecasts and interpolated data for the middle years (2012-2014).

Year (sales in thousands) 2010 2011 2012 2013 2014 2015
Smart phone Market 293000 462000 630000 800000 950000 1053000
iPhone Sales 47487 93102 138600 160000 178125 184275
iPhone Market Share 16.2% 20.2% 22.0% 20.0% 18.8% 17.5%
iPhone growth NA 96.1% 48.9% 15.4% 11.3% 3.5%

Based on these reports, iPhone sales growth will continue to be robust through 2014 and will not dip into single-digit growth until 2015.

We calculated an average annual tablet growth rate of about 30% through 2015 based on Kulbinder Garcha’s interview. Given these projections, it will be a few more years before the iPhone and iPad markets mature, allowing Apple ample opportunity to expand sales.

Fast forward to 2013;  …Click Here to Continue To The Full Article…

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GameStop’s Price And Dividend: Value Trap Or Opportunity?


Background (Source)

GameStop Corp. (GME), headquartered in Grapevine, Texas, is the world’s largest multichannel video game retailer. GameStop’s retail network includes 6,650 company-operated stores in 15 countries worldwide and online at GameStop.com. The network also includes: Kongregate.com, a leading browser-based game site; Game Informer® magazine, the leading multi-platform video game publication; Spawn Labs, a streaming technology company; and a digital PC game distribution platform available at www.GameStop.com/PC.

History:
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Do Frontier Communications’ Pension Obligations Pose A Threat To The Dividend?


Past comments on various Frontier Communications (FTR) articles have expressed concern the funding gap in the retirement and pension funds would start eating into cash required for capital expenditures, debt reduction and the biggest worry, dividends, especially if the unfunded status grows.

FTR has unfunded liabilities in excess of a billion dollars. It is reflected on the balance sheet under long-term liabilities labeled “Pension and other post-retirement benefits”. Much of this is due to the acquisition of the Verizon (VZ) properties in 2010. This article will look at the unfunded status of the Pension Plan and the OPEB or “Post-retirement Benefits Other Than Pensions” followed by a conclusion.

Pension:

We’ll start by taking a look at results over the last three years by quarter ($ in thousands):
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