Lumen Plunges on Its Dividend Cut: Is the Stock Now a Bargain or a Value Trap?
When Lumen Technologies (NYSE: LUMN) closed its two asset sales and appointed a new CEO over the past couple of months, it seemed highly probable that the company would cut its dividend. Yet even after big year-to-date declines in anticipation of the news, the stock fell another 15% after Wednesday night's earnings release, in which it announced the cut.
Is this a sign of Lumen's impending demise, or can the business be turned around? With a new CEO and a better balance sheet thanks to recent asset sales, Lumen could be an interesting stock for deep-value investors, as dividend seekers sell off their shares.
The dividend cut was probably necessary, as the sales of the Latin American business in the third quarter and the sale of its Incumbent Local Exchange Carrier (ILEC) business in 20 U.S. states in the fourth quarter will lower the company's overall cash flow, while proceeds will go toward paying down debt and investing in newer growth areas.
Source Fool.com
