Automotive World  Mar 8  Comment 
Less is more For reliable micro-electronics in sensitive automotive applications such as control units and sensors, BASF has now developed a portfolio of various polyamide 6 and 66 grades that help prevent damage to circuits by electric corrosion....
Forbes  Dec 30  Comment 
Gracenote plans to use its ubiquitous automotive presence and massive database for a new feature called Dynamic EQ that delivers audio enhancements across most car audio sources.
Forbes  Nov 7  Comment 
Recently, the Yale Center for Emotional Intelligence and the Born This Way Foundation founded by Lady Gaga held the Emotion Revolution Summit, a day-long event for teens to share their ideas for creating improved learning environments. On...
Forbes  Jun 2  Comment 
When emotional intelligence (EQ) first appeared to the masses, it served as the missing link in a peculiar finding: people with average IQs outperform those with the highest IQs 70% of the time. This anomaly threw a massive wrench into the broadly...
Motley Fool  May 5  Comment 
A handful of investing insights from US Ecology's first-quarter 2015 financial results.
Forbes  Feb 3  Comment 
My recent post, Why Your Boss Lacks Emotional Intelligence, really struck a nerve here on Forbes. Many of the messages I received came from people who had experienced first hand what our data set shows—emotional intelligence diminishes as you...
Forbes  Jan 27  Comment 
Too many people succumb to the mistaken belief that being likeable comes from natural, unteachable traits that belong only to a lucky few—the good looking, the fiercely social, and the incredibly talented. It’s easy to fall prey to this...
Forbes  Dec 17  Comment 
Sitting in the corner office in his hi-back, leather chair, Bob Limber exhales as he gazes out the window. Reflecting on his life, he is amazed by the journey. Once a line worker in a carburetor plant, at 58 Bob is the Senior Vice President of...
Motley Fool  Nov 29  Comment 
There is mixed evidence for the importance and validity of measures of emotional intelligence. So should you try to develop it? Science says no -- a different skill might be the key to your success.
Forbes  Oct 26  Comment 
How emotionally intelligent is your doctor? Although answers to this question vary, it is not surprising that physicians' social skills or "EQ" are related to their job performance. After all, regardless of doctors' technical competence, their...


Embarq (NYSE: EQ) emerged following the spin-off of Sprint's Local Telephone business that became effective on May 17, 2006. Investors who held Sprint Nextel common stock on May 8, 2006, received one share of EQ stock for every 20 shares of Sprint Nextel common stock they owned. Until then, EQ was a wholly-owned subsidiary of Sprint Nextel. EQ's assets and business now consist largely of those that comprised Sprint Nextel's former Local Telecommunications Division and Sprint North Supply operations. EQ, headquartered in Overland Park, Kansas, is now the fourth largest local communications company in the United States, (based on access lines) and provides services in 18 states which include many major metropolitan areas and rural markets. The customer base, market reach, competitors, network infrastructure and economics of the business vary widely among geographies. The total access lines are split even by between metropolitan and rural markets.

EQ reports its operating results in two segments Telecommunications (92% of 2006 revenues) and Logistics (8%). The Telecommunications segment provides regulated local communications services as an incumbent local exchange carrier, or ILEC, to approximately 5% of U.S. households, with approximately 6.9 million access lines as of December 31, 2006. Florida, North Carolina, Nevada, and Ohio territories represent approximately 66% of EQ's access lines. This segment provides local voice and data, high-speed Internet, nationwide long distance, wireless, satellite video and other services to customers within EQ's local service territories. Additionally, the company also provides access to Embarq's local network and other wholesale communication services for other carriers. The company offers wireless services to large and medium customers through a mobile virtual network operator (MVNO) arrangement with Sprint Nextel. The Logistics segment engages in procuring, configuring, and distributing equipment, materials, and supplies to the communications industry. This segment offers outside plant business communication systems, telephones and accessories, and network access equipment from manufacturers.


Erosion in access lines persists as the company continues to face stiff competition from wireless operators and cable companies with recent triple-play (voice, video, and data) offering to the consumer. Switched access lines declined 6.1% in 2006 and the percentage of access line losses will accelerate in 2007 as cable companies offering Voice over Internet Protocol (VoIP) services continue to add coverage in the company's territories. The challenge for the company will be to retain its subscriber level and grow revenue with new services and expansion of its geographical reach. One initiative that will attempt to offset existing service challenges is the delivery of new video services to compete against cable operators offering voice service in its local markets. However, EQ will face a difficult deployment process as municipality approval is required in each intended local jurisdiction before offering video to subscribers. Similar regulatory hurdles have already hindered other telephone companies, including Verizon and AT&T, deploying video broadcast services.

In June 2006, the company also started offering wireless services. However, EQ's wireless operation is leveraged from Sprint Nextel, and not organically owned by the company, which may limit overall financial return on its third party services. EQ plans to integrate its wireline voice and data services with the wireless service in order to complement and enhance the value of its core offerings. We believe that the non-exclusive wireless wholesale arrangement with Sprint Nextel will facilitate improved bundled services and more attractive pricing to customers. Unfortunately, Sprint Nextel is also consummating similar arrangements with competitors, including cable operators, so the outcome may not be as significant moving forward.

Although the divestiture of Sprint Nextel's local telephone business (EQ) unlocked value for Sprint shareholders and the company's aggressive dividend policy (the $2.50 dividend payout equates to a 5.0% yield) will entice investors to hold shares, much of the burden is now placed on EQ in terms of financial debt and the need to turn a mature operating business into one that becomes more robust. The highly leveraged balanced sheet is an issue that should be considered as the company had $5.87 billion of total long term debt and only $10 million of cash and equivalents as of September 30, 2007.

Earlier in the year, management's outlook for 2007 guided us to lower revenue and earnings levels than previously forecasted. The company estimated that year-over-year access lines will decline at a mid to upper 6% rate due to increasing competition from cable and wireless providers. Revenues are expected to grow modestly while operating income is estimated to decline. Management expects that the launch of its wireless service in 2006 will be dilutive to financial results in 2007 as a result of up-front customer acquisition costs as well as the absence of a substantial customer base generating a level of recurring revenue sufficient to cover these initial investments.

As a result of these challenges, we believe EQ's cash generation and earnings power will be offset by the company's limited growth prospects and the regulatory challenges, which we believe are negative factors that may impede higher valuations.


Wikinvest © 2006, 2007, 2008, 2009, 2010, 2011, 2012. Use of this site is subject to express Terms of Service, Privacy Policy, and Disclaimer. By continuing past this page, you agree to abide by these terms. Any information provided by Wikinvest, including but not limited to company data, competitors, business analysis, market share, sales revenues and other operating metrics, earnings call analysis, conference call transcripts, industry information, or price targets should not be construed as research, trading tips or recommendations, or investment advice and is provided with no warrants as to its accuracy. Stock market data, including US and International equity symbols, stock quotes, share prices, earnings ratios, and other fundamental data is provided by data partners. Stock market quotes delayed at least 15 minutes for NASDAQ, 20 mins for NYSE and AMEX. Market data by Xignite. See data providers for more details. Company names, products, services and branding cited herein may be trademarks or registered trademarks of their respective owners. The use of trademarks or service marks of another is not a representation that the other is affiliated with, sponsors, is sponsored by, endorses, or is endorsed by Wikinvest.
Powered by MediaWiki