CHICAGO, April 5, 2011 /PRNewswire/ -- 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: CenturyLink Inc. (NYSE: CTL), AT&T Inc. (NYSE: T), Verizon Communications Inc. (NYSE: VZ), Sprint Nextel Corp. (NYSE: S) and Dominion Resources Inc. (NYSE: D).
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Here are highlights from Monday's Analyst Blog:
CenturyLink Finally Acquires Qwest
CenturyLink Inc. (NYSE: CTL) finally completed its $12 billion merger with Denver-based Qwest Communications following all the necessary approvals and regulatory clearances. The merger created the third-largest landline operator in the U.S.
The combined company will operate under the CenturyLink brand. However, it will take several months to fully integerate the two brands. Until then, the Qwest brand will continue operating in its former markets.
The newly formed company will still be headquartered in Monroe but will maintain a key operational presence in Denver. The current CenturyLink board members as well as four board members of Qwest will form the board of directors of the combined company.
As per the agreement, Qwest shareholders will receive 0.1664 shares of CenturyLink stock for each share of Qwest stock. In addiiton, Qwest shareholders will receive cash in respect of fractional shares.
The merger is expected to be immediately accretive to CenturyLink's free cash flow and generate cost synergies of roughly $625 million over 3−5 years. Key drivers of these synergies include reduction of corporate overhead, elimination of duplicate functions and systems as well as increased operational efficiencies.
The combination will also create a 190,000 route-mile fiber network, which will provide greater scale, scope and opportunities. The new CenturyLink will now have a competitive advantage over its two major rivals, AT&T Inc. (NYSE: T) and Verizon Communications Inc. (NYSE: VZ), with greater scale and operational efficiency in a mature U.S. home-phone market.
We see this merger as yet another consolidation attempt by CenturyLink. In July 2009, the company acquired the fourth largest U.S. local telephone service provider Embarq Corporation, which was a spin-off from Sprint Nextel Corp. (NYSE: S). The integrated company has emerged as one of the largest rural telecom carriers by access lines.
In 2010, CenturyLink generated about $7 billion in revenues. With the Qwest merger, the annual revenue is expected to be more than double at roughly $19 billion with 15 million phone lines and operations across 37 states. CenturyLink continues to pay an anuual dividend $2.90 per share to its shareholders.
We are currently maintaining our long-term Neutral rating on CenturyLink with the Zacks #3 (Hold) Rank.
Dominion Unit Converts to Biomass
In a move to generate more power from renewable sources, energy utility Dominion Resources Inc. (NYSE: D) announced that its subsidiary Dominion Virginia Power, has decided use biomass instead of coal in three of its power stations.
Dominion Virginia Power's decision to convert its three generating stations in Altavista, Hopewell and Southampton County are likely to have a positive impact on the environment and also benefit consumers. The usage of biomass will lower the emission of green house gas and biomass will be a cheaper source of fuel compared to coal.
These plants will mainly use waste wood left from timbering operations as a source of fuel. If approved by the local authority and the regulators will begin production from the converted units in 2013.
These units can presently produce 63 megawatts (MW) power each and is only used when demand is at its peak. After conversion, these units will produce 50 MW each, and will remain operative 24x7.
Dominion Resources recently decided to improve and expand the infrastructure of Virginia Power. The company will invest $1.7 billion over 2011–2012, which will focus on construction and expansion of electric generation facilities, environmental upgrades, construction improvements, expansion of electric transmission and distribution assets, and purchases of nuclear fuel.
Dominion Resources is constantly developing its renewable power portfolio and is in course to meet the Virginia and North Carolina legislation passed for renewable power. The company is set to achieve Virginia's goals of 12% renewable power by 2022 and 15% by 2025 as well as North Carolina's Renewable Portfolio Standard of 12.5% by 2021.
We appreciate the decision of conversion as it will not only have a positive environmental impact but at the same time provide a financial boost to this region through job creation in forestry and trucking industries and power stations for the next 30 years.
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