For Immediate Release
Chicago, IL – November 3, 2009 – Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include: CIT Group Inc. (CIT), Dean Foods (DF), Frontier Communications (FTR), Verizon Communications (VZ) and Time Warner Cable (TWC).
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Here are highlights from Monday’s AnalystBlog:
CIT Group Files Chapter 11
CIT Group Inc. (CIT) has filed for Chapter 11 protection on Sunday. The company struggled for months to avoid collapse since the recession elicited billions of dollars in loan losses, and the financial crisis made it incapable of funding itself from its main financing source.
This widely expected Chapter 11 filing is one of the largest in U.S. history, following Lehman Brothers, Washington Mutual, WorldCom and General Motors. The U.S. government will probably lose most of its $2.3 billion aid given to CIT last December through the Troubled Asset Relief Program (TARP). We think the problems at CIT will further weigh on the U.S. economy.
CIT’s bankruptcy filing shows $71 billion in finance and leasing assets against total debt of $64.9 billion. The company cited that its bondholders selected a prepackaged reorganization plan which will reduce total debt by $10 billion while allowing the company to run its business.
According to management, the decision to proceed with the company’s plan of reorganization will allow it to continue to provide funding to two sectors — small business and middle market customers — which remain vital to the U.S. economy.
Dean Foods Beats, Ups Guidance
Dean Foods (DF) reported relatively strong third-quarter results with earnings of 34 cents per share. Quarterly earnings were up 21% year-over-year.
Quarterly net sales declined 13.2% year over year to $2.7 billion due to the pass-through of lower overall dairy commodity costs, despite positive contributions from acquisitions and lower net sales volumes in the WhiteWave-Morningstar operations, which were partially offset by acquisition-related volume growth in Fresh Dairy Direct and WhiteWave-Morningstar.
Net sales in the Fresh Dairy Direct segment declined 18.3% as the company passed some of the lower dairy costs to customers but were partially offset by continued volume growth. Raw milk prices were 45% lower compared to the prior-year.
Frontier Deal Wins Key Approvals
Frontier Communications (FTR), a leading telecom operator in rural and suburban areas in the US, has reportedly received approvals from the Public Utilities Commissions of the states of California and Neveda and Public Service Commission of South Carolina for its impending acquisition of the rural fixed-line business of Verizon Communications (VZ).
Moreover, the acquisition was recently approved by the shareholders of Frontier. The transaction is now subject to approval by the Federal Communications Commission (FCC) and other closing conditions and is expected to close during the second quarter of 2010.
Verizon is divesting its rural fixed-line business (involving approximately 4.8 million access lines) in 14 states to Frontier under an agreement valued at approximately $8.6 billion. Under the deal terms, Verizon’s shareholders will receive approximately $5.25 billion in common stock of Frontier, equating to around 68% stake in the company.
Moreover, Verizon will also receive $3.3 billion in cash and debt securities from Frontier. The transaction, if successful, will provide Verizon’s shareholders a controlling interest in Frontier.
This deal represents a major opportunity for Frontier as the company remains significantly challenged by the beleaguered economic conditions in its service territories and contends with loss of legacy landline telephony business to wireless and other competitive offerings by cable TV operators such as Time Warner Cable (TWC). Frontier continues to experience decline in revenues which is, to a great extent, attributable to consistent sequential decline in fixed access lines.
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