Latest news with #KateJohnson
Yahoo
6 days ago
- Business
- Yahoo
Will Lumen Technologies' Asset Sale Spark a Recovery in Its Stock?
Lumen will sell its mass markets fiber business to AT&T for $5.75 billion. The telecom will likely use the proceeds to reduce debt and invest in its network. The question for investors is whether that move will draw more investors to Lumen stock. 10 stocks we like better than Lumen Technologies › Telecom specialist Lumen Technologies (NYSE: LUMN) just announced the sale of its mass-market fiber business to AT&T for $5.75 billion. That move continues the transformation which began last summer when it partnered with Microsoft to leverage its existing network to strengthen connectivity among Microsoft's data centers. It has also agreed to provide similar services to Amazon and Meta Platforms. The sale of the mass markets fiber business seems to confirm that Lumen is pivoting toward business and away from the consumer market. The question for investors is whether that deal will boost Lumen's stock over the long term. According to CEO Kate Johnson, the company will receive net proceeds of $4.8 billion. Lumen can use those funds to reduce its debt or support its growing need to increase its capital expenditures as the company tries to reinvent itself from what had been a declining wireline telco business. Still, one has to assume Lumen will focus on debt reduction at some level. As of the first quarter of 2025, it holds $17.3 billion in long-term debt. The company's book value is only $289 million, so that liability has put tremendous strain on the company's balance sheet. Moreover, the company has to build what it calls a "backbone" for artificial intelligence (AI) to serve its enterprise customers. To that end, Lumen plans to spend $4.1 billion to $4.3 billion in capex this year, presumably to help build that AI backbone. That is up 30% from the $3.2 billion in spending in 2024 but should enable the company to meet the needs of its new customers. Nonetheless, investors may be right to question how much the deal helps Lumen as an investment. So far, the pivot toward enterprise has not boosted the company's financials. In the first quarter of 2025, revenue dropped 3% year over year to $3.2 billion. Although that is an improvement from the 10% drop in revenue in all of 2024, it still represents a decline. Despite a net loss of $201 million, Lumen generated $354 million in free cash flow in Q1. Unfortunately, Lumen expects $700 million to $900 million in free cash flow in 2025, down from $1.4 billion in 2024. However, free cash flow will fall because of the increase in capex spending, not poor financial performance. Investors do not know quite what to make of Lumen's transformation. The stock is up 200% over the past year but down 64% from its peak in November. This likely indicates that investors are wary. Measuring the valuation is also tricky. The lack of profitability leaves it without a P/E ratio. As for its price-to-sales (P/S) ratio, it is less than 0.3. That is up from 2024 lows but below the five-year average of 0.4, making it unclear whether Lumen's valuation will help draw investors back to its stock. Given the current state of the company, investors should probably limit stock purchases to speculative positions until its deals begin to drive positive revenue growth. Prospects for a turnaround have improved thanks to the aforementioned AI partnerships, and the cash infusion from the sale of the consumer fiber business greatly increases the odds of a turnaround. Unfortunately, these deals have not translated into an improved financial performance. Lumen's revenue continues to fall, and forecasts indicate that trend will continue through 2025 and 2026. Ultimately, until revenue growth turns consistently positive, Lumen stock will probably struggle to move higher. Before you buy stock in Lumen Technologies, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the for investors to buy now… and Lumen Technologies wasn't one of them. The 10 stocks that made the cut could produce monster returns in the coming years. Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you'd have $653,389!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you'd have $830,492!* Now, it's worth noting Stock Advisor's total average return is 982% — a market-crushing outperformance compared to 171% for the S&P 500. Don't miss out on the latest top 10 list, available when you join . See the 10 stocks » *Stock Advisor returns as of May 19, 2025 John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool's board of directors. Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister to Meta Platforms CEO Mark Zuckerberg, is a member of The Motley Fool's board of directors. Will Healy has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Amazon, Meta Platforms, and Microsoft. The Motley Fool recommends the following options: long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft. The Motley Fool has a disclosure policy. Will Lumen Technologies' Asset Sale Spark a Recovery in Its Stock? was originally published by The Motley Fool Sign in to access your portfolio
Globe and Mail
28-05-2025
- Business
- Globe and Mail
Will Lumen Technologies' Asset Sale Spark a Recovery in Its Stock?
Telecom specialist Lumen Technologies (NYSE: LUMN) just announced the sale of its mass-market fiber business to AT&T for $5.75 billion. That move continues the transformation which began last summer when it partnered with Microsoft to leverage its existing network to strengthen connectivity among Microsoft's data centers. It has also agreed to provide similar services to Amazon and Meta Platforms. The sale of the mass markets fiber business seems to confirm that Lumen is pivoting toward business and away from the consumer market. The question for investors is whether that deal will boost Lumen's stock over the long term. Where to invest $1,000 right now? Our analyst team just revealed what they believe are the 10 best stocks to buy right now. Learn More » The AT&T deal and its implications According to CEO Kate Johnson, the company will receive net proceeds of $4.8 billion. Lumen can use those funds to reduce its debt or support its growing need to increase its capital expenditures as the company tries to reinvent itself from what had been a declining wireline telco business. Still, one has to assume Lumen will focus on debt reduction at some level. As of the first quarter of 2025, it holds $17.3 billion in long-term debt. The company's book value is only $289 million, so that liability has put tremendous strain on the company's balance sheet. Moreover, the company has to build what it calls a "backbone" for artificial intelligence (AI) to serve its enterprise customers. To that end, Lumen plans to spend $4.1 billion to $4.3 billion in capex this year, presumably to help build that AI backbone. That is up 30% from the $3.2 billion in spending in 2024 but should enable the company to meet the needs of its new customers. Does the deal boost the case for Lumen stock? Nonetheless, investors may be right to question how much the deal helps Lumen as an investment. So far, the pivot toward enterprise has not boosted the company's financials. In the first quarter of 2025, revenue dropped 3% year over year to $3.2 billion. Although that is an improvement from the 10% drop in revenue in all of 2024, it still represents a decline. Despite a net loss of $201 million, Lumen generated $354 million in free cash flow in Q1. Unfortunately, Lumen expects $700 million to $900 million in free cash flow in 2025, down from $1.4 billion in 2024. However, free cash flow will fall because of the increase in capex spending, not poor financial performance. Investors do not know quite what to make of Lumen's transformation. The stock is up 200% over the past year but down 64% from its peak in November. This likely indicates that investors are wary. Measuring the valuation is also tricky. The lack of profitability leaves it without a P/E ratio. As for its price-to-sales (P/S) ratio, it is less than 0.3. That is up from 2024 lows but below the five-year average of 0.4, making it unclear whether Lumen's valuation will help draw investors back to its stock. Should you buy Lumen Technologies stock? Given the current state of the company, investors should probably limit stock purchases to speculative positions until its deals begin to drive positive revenue growth. Prospects for a turnaround have improved thanks to the aforementioned AI partnerships, and the cash infusion from the sale of the consumer fiber business greatly increases the odds of a turnaround. Unfortunately, these deals have not translated into an improved financial performance. Lumen's revenue continues to fall, and forecasts indicate that trend will continue through 2025 and 2026. Ultimately, until revenue growth turns consistently positive, Lumen stock will probably struggle to move higher. Should you invest $1,000 in Lumen Technologies right now? Before you buy stock in Lumen Technologies, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Lumen Technologies wasn't one of them. The 10 stocks that made the cut could produce monster returns in the coming years. Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you'd have $653,389!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you'd have $830,492!* Now, it's worth noting Stock Advisor 's total average return is982% — a market-crushing outperformance compared to171%for the S&P 500. Don't miss out on the latest top 10 list, available when you join Stock Advisor. See the 10 stocks » *Stock Advisor returns as of May 19, 2025 John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool's board of directors. Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister to Meta Platforms CEO Mark Zuckerberg, is a member of The Motley Fool's board of directors. Will Healy has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Amazon, Meta Platforms, and Microsoft. The Motley Fool recommends the following options: long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft. The Motley Fool has a disclosure policy.
Yahoo
22-05-2025
- Business
- Yahoo
Lumen CEO talks AT&T deal, enterprise: We have 'right to win' in AI
Lumen Technologies (LUMN) agrees to sell its consumer fiber-optic internet business to telecommunication giant AT&T (T) in a $5.75 billion cash deal. Lumen CEO Kate Johnson joins Julie Hyman and Brad Smith on Catalysts to talk more about the deal and how it's allowing Lumen to focus more on its enterprise business, particularly in its ability to scale and AI. To watch more expert insights and analysis on the latest market action, check out more Catalysts here. Lumen Technologies is selling its consumer fiber to home business to AT&T for five point $75 billion in cash. It's part of the company's effort to focus on its enterprise strategy. For more on this, we got Lumen CEO Kate Johnson joining us, and I'm also joined by Morning Brief co-host Brad Smith. Kate, thank you so much for taking the time to talk to us this morning. So, um, selling this business to focus on your enterprise business, talk me through the thinking on that and how this will allow you to do that. Uh, thanks for having me on the show and happy to announce it's a new day for Lumen. The thinking behind the deal was quite simple. Um, every company on Earth is leaning into AI. It's become a mission-critical technology for any business that wants to transform, that wants to innovate, that wants to compete and perform in this environment. Um, and we have a right to win with assets to support those companies, which I can talk about more in a minute. I think there was another trend that we were looking at very closely, which is the convergence of the demand curves for fiber and wireless in the consumer space. And AT&T has the scale, the brand, the footprint to really compete and invest in that business. So we chose to double down where we have a right to win and sell the business to AT&T on the consumer fiber side and, uh, and retain our ability to really serve the enterprise. You know, I wonder in the talks that you've had with the executives over at AT&T, I've had the opportunity to speak with the CFO Pascal Desroches in the past, uh, and in the most recent weeks when I was discussing with him their plans for fiber, where did it ultimately net out and become clear that this would make sense, not just for AT&T but for Lumen as well? Well, I mean, if you look at the deal, uh, Brad, it's actually great for us. $5.75 billion, when you do net proceeds after tax and you add some cash on hand, we can, uh, reduce debt by $4.8 billion and delever the company from 4.9 to 3.9, and that's just getting started. We retain all of the assets on the copper side in the consumer, wholesale, and enterprise space. They have meaningful, uh, cash flow and contribute meaningfully to our overall financial health. So we can continue to use those dollars to do whatever we wish. We have financial flexibility now. We can pay down debt. We can continue to digitize and streamline our operations, or we can start to, uh, think about acquiring new capabilities to serve the enterprise. Um, Kate, talk to us a little bit about your enterprise customers, if you can tell us who they are or what kind of enterprises they are, and what the growth opportunity looks like there. Sure. Large enterprise on the commercial side, uh, you know, the mid-markets, we serve public sector, all of all of them, okay? All of them in North America, multinational corporations as well. And our network is proximate to so many of them because it's huge, and it comes close to touching them. They all share a common problem. AI is all about huge data processing needs, right? And there's a lot of complexity in, uh, the network architecture of today. You've got on-prem, you've got edge, you've got data centers, you've got multiple clouds, and you got to serve the data to the most efficient place to do the compute, which means you need a network that can support it. And legacy networks, they're not big enough, they're not fast enough, they're not secure enough, and they're not intelligent enough. So we're fixing all of that with our physical network and a digital layer on top to make it easy for any enterprise, public sector or commercial, big or small, to use network to leverage AI. With all that in mind, with the proceeds from a deal like this, how do you see kind of building out the future for the business, which investors have have really been trying to wrap their minds around over the past couple of years as evidenced in some of the stock price fluctuations and knowing how much capital has to get infused up front in order to bring that scale to fruition. We have a digital platform in place already where we provide network as a service to these customers. This is cloudifying Telco, so take traditional transport mechanisms, whether it's IP or waves or Ethernet. And now imagine giving customers the ability to fire up any port with any service, anytime, anywhere. That's cloud consumption. That's the way they're used to thinking of these capabilities, and we're giving it to them now. But we're also investing in data protection services and security services that we can layer on that digital experience for them. So we have this amazing ability to scale the services that we sell, to scale the revenue in the enterprise space, and provide it with cloud economics, which means the marginal cost to serve these customers continues to go down. We're just at the beginning innings of this, uh, new phase of imagining the future of networking, but we've made incredible progress and the future is incredibly bright. How much of that networking do you believe continues to stay on the ground on-premise and and in some of these cloud data centers versus what's getting sent up via satellites into skies as we're seeing that also being prioritized on the other side of communications? So I think any enterprise needs to have a fulsome strategy in terms of how they're going to transport data. If they've got remote locations, you know, you can go anything from fixed wireless to to satellite to 5G. And when they think about transporting, you know, data, data needs to find fiber as fast as possible. So we're very comfortable with our role no matter what those those technologies on top do and how they evolve, data needs to find fiber as fast as possible, and we've got the best fiber network. Kate, thank you so much again for taking the time. Brad, thank you as well. 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Yahoo
22-05-2025
- Business
- Yahoo
Lumen CEO talks AT&T deal, enterprise: We have 'right to win' in AI
Lumen Technologies (LUMN) agrees to sell its consumer fiber-optic internet business to telecommunication giant AT&T (T) in a $5.75 billion cash deal. Lumen CEO Kate Johnson joins Julie Hyman and Brad Smith on Catalysts to talk more about the deal and how it's allowing Lumen to focus more on its enterprise business, particularly in its ability to scale and AI. To watch more expert insights and analysis on the latest market action, check out more Catalysts here.
Bloomberg
22-05-2025
- Business
- Bloomberg
Lumen CEO Talks $5.75B Deal With AT&T
Open Interest AT&T is buying Lumen's consumer fiber business for nearly $6 Billion dollars. Kate Johnson, the CEO of Lumen Technologies joined Bloomberg Open Interest to talk about the deal (Source: Bloomberg)
