Shares of Frontier Communications Corp. (FTR) dropped more than 4 percent in extended trading on Thursday after the telecommunications services provider slashed its quarterly dividend for the first quarter by 47 percent.
The company slashed its quarterly dividend for the first quarter to $0.10 per share, payable on March 30 to shareholders as of March 9, 2012. The company said the lower dividend will enable it to reduce debt, improve leverage, provide cash to invest in the network and other strategic initiatives.
The company also reported a profit for the fourth quarter that edged down from last year, reflecting a drop in revenues, partially offset by lower income tax expense. However, both adjusted earnings per share and quarterly revenues topped analysts' expectations.
"Fourth quarter 2011 demonstrated the strongest quarterly revenue and EBITDA margin performance since our Verizon acquisition. We also finished a successful 4 state conversion, started the prep work for the additional 9 states to convert in March 2012, and delivered annualized synergies of $552 million enabling us to increase our guidance for 2012 to $650 million." Chairman & CEO Maggie Wilderotter said in a statement.
The Stamford, Connecticut-based provider of Voice, Internet data access and business communication solutions reported net income of $42.2 million or $0.04 per share for the fourth quarter, lower than $46.0 million or $0.05 per share in the prior-year quarter.
Excluding integration costs and severance and early retirement costs, adjusted net income for the latest quarter was $69.0 million or $0.07 per share.
On average, 13 analysts polled by Thomson Reuters expected Frontier to report earnings of $0.05 per share for the fourth quarter. Analysts' estimates typically exclude special items.
Revenues for the quarter declined to $1.28 billion from $1.36 billion in the same quarter last year, but topped twelve Wall Street analysts' consensus estimate of $1.27 billion by a whisker.
The revenue drop was attributable to decreases in the number of residential and business customers, switched access, subsidy, video and other revenue.
The company grew its high-speed Internet customers by 9,300 during the quarter, and had net additions of 1,000 video customers, including 6,900 net additions of satellite TV customers, but a net loss of 5,900 FiOS video customers.
The company also revised its cost synergy target to $650 million by end of 2012.
FTR closed Thursday's regular trading session at $4.46, up $0.15 or 3.48% on a volume of 39.24 million shares, higher than the three-month average volume of 20.222 million shares. However, the stock pared the gains to lose $0.19 or 4.26% in after-hours trading.
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