In Further Erosion of Landline Telephones, Elk Grove's Frontier Communication Announces Reverse Stock Split
May 14, 2017 |
Frontier Communications (NASDAQ:FTR), the parent company of longtime landline telephone operator in Elk Grove, announced a reverse stock split last week.
The stock split was approved at FTR's May 10, 2017 annual stockholder meeting in Norwalk, Conn. The stock split, which will be effective July 10, 2017 when shareholders will be issued one share for each 15 they possess.
FTR's closing stock price on Friday, May 12 was $1.21 per share. The stock has traded as high as $5.30 in the last 52 weeks and with Friday's closing prices, it was two-cents above its 52-week low.
Like many legacy landline telephone carriers, FTR has been battered by the growing use of cell phones and cable companies providing Internet access. A recently released study by the Center for Disease Control found that for the first time, less than 50-percent of American households have landlines.
Although FTR is operating in an environment hostile to landline telephones, some of its current financial problems stem from their ill-timed 2015 acquisition of Verizon's landline operation. Although FTR took control of Verizon's operations in 14 states, it also assumed debt of $3.3 billion in debt.
Generally, companies will do reverse stock splits to keep from being de-listed on the NASDAQ exchange or the New York Stock Exchange, which generally required stocks to be prices above $1.00 per share. Additionally, with slumping stock prices, companies will often invoke reverse splits to prevent stock traders from selling short by making fewer shares available.
FTR, and it predecessor companies, have been the dominant landline telephone provider in Elk Grove for decades and have been major corporate sponsors of community events. It is not know if FTR will continue its sponsorship of several community events which the City of Elk Grove has come to rely on for financial support.