Frontier Communications Earnings Fall SHORT

S&P 500 (NYSE:SPY) component Frontier Communications Corporation (NYSE:FTR) reported a lower net income in second quarter, missing analysts’ estimates. Frontier Communications provides telecommunications services to rural areas and small and medium-sized towns and cities.

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Frontier Communications Corporation Earnings Cheat Sheet

Results: Net income for Frontier Communications Corporation fell to $18 million (2 cents per share) vs. $32.3 million (3 cents per share) a year earlier. This is a decline of 44.2% from the year-earlier quarter.

Revenue: Fell 4.8% to $1.26 billion from the year-earlier quarter.

Actual vs. Wall St. Expectations: Frontier Communications Corporation fell short of the mean analyst estimate of 5 cents per share. Analysts were expecting revenue of $1.26 billion.

Quoting Management: “Frontier’s second quarter 2012 showed solid revenue performance and the highest operating margin since the closing of our acquisition,” said Maggie Wilderotter, Chairman & CEO of Frontier Communications. “Our strong results were positively impacted by our proactive revenue initiatives commenced in the second quarter to rationalize our product set and our customer pricing. Our new, residential tiered pricing gives customers flexibility and choice, which should enhance the run-rate of our financials for the second half of 2012. During the quarter, we expanded our network’s broadband reach to an additional 60,000 households and are aggressively focused on increasing our overall network speeds over the next eighteen months. Frontier is also excited to be connecting 92,876 additional broadband homes through our $71.9 million receipt of the Federal Communications Commission’s Connect America Fund, which is aligned with our corporate goal of improved broadband connectivity for rural America and we will connect even more broadband households starting in Q4 2012 through our recent agreement with Hughes Network Systems.”

Key Stats:

Revenue has fallen for the last four quarters. Revenue declined 5.8% to $1.27 billion in the first quarter. The figure fell 5.6% in the fourth quarter of the last fiscal year from the year earlier and dropped 8% in the third quarter of the last fiscal year from the year-ago quarter.

The company has now fallen short of estimates in the last two quarters. In the first quarter, it missed expectations by one cent with net income of 5 cents versus a mean estimate of net income of 6 cents per share.

Net income has dropped 28.3% year-over-year on average across the last five quarters. Performance was hurt by a 51.1% decline in the first quarter from the year-earlier quarter.

Looking Forward: The outlook for the company’s results in the upcoming quarter is unfavorable. The average estimate for the third quarter is 5 cents per share, down from 6 cents ninety days ago. For the fiscal year, the average estimate has moved down from 24 cents a share to 20 cents over the last ninety days.

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(Company fundamentals provided by Xignite Financials. Earnings estimates provided by Zacks)

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