CenturyLink Q1 beats but forecast fails to inspire

CenturyLink Q1 beats but forecast fails to inspire

Stock Market Predictions

BANGALORE (Global Markets) - CenturyLink Inc (CTL.N) posted a better-than-expected quarterly profit as gains at high-speed Internet customers offset those disconnecting their home phones, but the rural telephone operator forecast second-quarter earnings below market.
Regional phone companies like CenturyLink, which acquired rival Qwest for $10.6 billion last month, face the challenge of finding new ways to grow as consumers disconnect home phones in favor of Web and mobile services.

The company agreed to buy Savvis Inc (SVVS.O) for $2.5 billion last month to beef up its data center business and cash in on growing demand for cloud services.

CenturyLink forecast second-quarter earnings of 63-67 cents a share, on revenue of $4.40-$4.43 billion, including the impact from operations of its recent Qwest buy and certain other items.

Analysts, on average, had expected earnings of 72 cents per share, according to Thomson Global Markets I/B/E/S.

For full-year 2011, the company expects earnings of $2.55-$2.65 per share, while analysts were expecting $2.96.

CenturyLink's 2011 outlook looks conservative, brokerage UBS said in a note to clients.

"While the clear focus today is on updated guidance post-Qwest, we do not think investors should penalize the shares for a headline EPS guide that is below expectations," Nomura analyst Mike McCormack said.

CenturyLink shares fell nearly 3 percent as investors flagged its outlook numbers.

Nomura's McCormack said the Qwest merger has the potential to draw out meaningfully higher synergies than current estimates. "We think CenturyLink will reward patient investors."

CenturyLink said it expects to achieve about $375 million in annual run-rate synergies end of 2011 in connection with its 2009 acquisition of Embarq.

STRONG Q1 INTERNET SUBSCRIBER ADDS

During the first quarter, CenturyLink was able to slow the rate of line loss in its business and tap the demand for high-speed Internet and high-bandwidth services, Chief Executive Glen Post said in a statement.

The company lost 516,000 access line customers, ending the quarter with 6.4 million lines, down 7.5 percent from a year ago.

However, it added more than 52,000 high-speed Internet customers to end the quarter with about 2.4 million.

"Access line and broadband subscriber trends were both slightly better than our forecast," Stifel Nicolaus analyst Christopher King said.

For January-March, excluding items, CenturyLink earned 76 cents a share, topping estimates of 70 cents per share.

CenturyLink shares were trading flat at $40.31 on Thursday on the New York Stock Exchange. They touched a low of $39.28 earlier in the day.

(Reporting by Saqib Iqbal Ahmed in Bangalore; Editing by Unnikrishnan Nair and Joyjeet Das)

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Brokerages cut earning estimates on BofA

Brokerages cut earning estimates on BofA

Stock Market Predictions

(Global Markets) - JMP Securities said Bank of America Corp has the capital levels to absorb $100 billion in mortgage losses without technically needing to raise capital, but practical considerations could force the issue at half that loss amount.

Though the largest U.S. bank by assets currently has a pro-forma $37 billion capital cushion under the Basel III framework, mounting mortgage losses could transcend earnings and cut into the capital buffer, leading the bank issue stock and dilute shareholders, JMP Securities analysts David Trone said.

"As we saw in 2008 and 2009, financial firms will often be forced to raise capital well before the technical benchmarks are breached," Trone wrote in a note.

"We suspect the company would raise (capital) even at $50 billion, or half the projected loss levels in our 'reverse engineer/stress test' analysis."

JMP said the newly issued warrants to Berkshire Hathaway Inc imply a modest share dilution, cutting its 2011 operating EPS estimate by a cent to $0.95 and 2012 operating EPS by 7 cents to $1.42.

It maintained its "market perform" rating on the stock.

In August, Warren Buffet said he will invest $5 billion in the bank.

Separately, Guggenheim Partners also cut its earnings estimates and lowered its price target by a dollar to $10 on the bank's stock to reflect the market's current lack of appetite for risk and the overhang which is directly related to the bank's acquisition of CountryWide.

The brokerage lowered its 2011 estimated EPS by 3 cents to a loss of 17 cents and estimated 2012 EPS by 4 cents to $1.33, while maintaining its "buy" rating on the stock.

Shares of Bank of America were trading down 2 percent at $7.07 in early trade on Friday on the New York Stock Exchange. The stock has lost nearly 50 percent of its value since January.

(Reporting by Tanya Agrawal in Bangalore; Editing by Joyjeet Das)

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Sanofi hit from EU Lovenox copies seen minor: broker

Sanofi hit from EU Lovenox copies seen minor: broker

Stock Market Predictions

PARIS (Global Markets) - French drugmaker Sanofi (SASY.PA) faces limited impact from proposals that could make it easier for generic competitors to sell a biosimilar version of its blood-thinner Lovenox in Europe, Deutsche Bank analysts said on Friday.

Although the European Medicines Agency wants to update its guideline on biosimilar drugs, the brokerage reckons that the drug's much lower price in Europe than in the United States and competition from similar treatments could deter generic drugmakers from developing cheap copies of Lovenox.

"While the entire loss of EU Lovenox sales by 2015 would lower our EPS (earnings per share) by 4 percent, in practice we see no more than 1-2 percent EPS sensitivity," the analysts said in a note to investors.

Despite its having lost patent protection, there are no Lovenox biosimilars in Europe because current guidelines require a comparative clinical trial in each of its six indications.

Novartis' (NOVN.VX) generic unit Sandoz, which sells a biosimilar version of Lovenox in the United States with Momenta Pharmaceuticals (MNTA.O), has said this process would be too expensive.

Sales of Lovenox, once one of Sanofi's multi-billion euro selling products, totaled 1.1 billion euros ($1.6 billion) in the first half of 2011.

Sanofi shares, which have lost around 10 percent of their value since the start of the year, were trading virtually unchanged at 52.52 euros at 1425 GMT (10:25 a.m. EDT).

($1 = 0.707 Euros)

(Reporting By Elena Berton; Editing by Christian Plumb and Ben Hirschler)

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