Stock Report for FiberTower Corp. (FTWR)
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    Stock Alert for FiberTower Corp. (FTWR)

    FiberTower Corp. (FTWR) is an alternative provider of facilities-based backhaul services to wireless carriers. Facilities-based providers own or lease a substantial portion of the property and equipment necessary to provide backhaul services. Backhaul is the transport of voice, video and data traffic from a wireless carrier’s mobile base station, or cell site, to its mobile switching center, or MSC, or other exchange point where the traffic is then switched onto a wireline telecommunications network. The Company provides backhaul services nationally by utilizing its wireless spectrum assets and fiber relationships to construct and operate high-coverage, high-capacity hybrid microwave and fiber networks. Its services provide wireless carriers a long-term solution for their increasing demand for backhaul capacity while giving them increased availability and reliability.  As of December 31, 2010, FTWR provided service to 6,400 billing customer locations at 3,276 deployed sites in 13 markets throughout the United States.

    Share Statistics (31-Aug-11) FY2009 FY2010 % Chg Q22010 Q22011 % Chg
    Symbol FTWR Revenue, $Mn 63.24 76.12 20.4% 18.39 23.43 27.4%
    Current price $1.14 Gross marg. 7.9% 20.0% 153.2% 17.3% 18.9% 9.2%
    52wk Range: $0.64-$4.82 Oper. margin -47.3% -34.2%
    Avg Vol (3m): 1,415,300 Net margin -3.4% -64.9% 1808.8% -71.0% -49.1% -30.8%
    Market Cap. 52.95M
    Shares Outstanding 46.44M EPS, $ -4.22 -0.98 -76.8% -0.26 -0.20 -23.1%

    Source:, SEC Filings.

    Investment Highlights

    Shares of FTWR jumped 38.28% in the last five days; and inched up 0.01% in the last month.  Year-to-date, the stock is down 68.80%.

    Early in August, the  San Francisco, Calif.-based wireless backhaul services provider announced its results for the second quarter ended June 30, 2011, which, according to CEO Kurt Van Wagenen, reflected solid adjusted EBITDA performance despite a revenue decrease from the previous quarter.

    Service revenues for the second quarter 2011 increased by $5.0 million, or 27%, to $23.4 million, compared to $18.4 million for the second quarter of 2010.  During the quarter, the Company recorded $3.4 million of non-recurring revenue from the collection of early termination liabilities (ETL).  Revenue excluding the ETL was $20.0 million, increasing 11% compared to the second quarter of 2010. This increase was primarily driven by selling additional capacity and Ethernet services.

    In addition to the previously announced Clearwire service terminations, the Company is experiencing an increased level of TDM churn as carriers migrate to Ethernet, primarily from AT&T in the second quarter.  During the second quarter, FTWR received service terminations from Clearwire and AT&T representing approximately $951 thousand in monthly recurring revenue and $8.3 million in early termination liabilities.  The Company collected $3.3 million of ETL revenue from these customers of which $1.9 million came from Clearwire disconnections related to approximately $434 thousand in monthly recurring revenue.  During the quarter ending June 30, 2011, the Company received service terminations from AT&T representing approximately $517 thousand of monthly recurring revenue, which was partially offset by new growth, and collected $1.4 million of ETL revenue.  FTWR had $5.6 million of uncollected ETL revenue due from AT&T at June 30, 2011.

    Operating expenses were $31.5 million in the second quarter, compared to $28.0 million in the second quarter of 2010.  Included in second quarter 2011 operating expenses is a $3.1 million impairment charge related to the write-off of excess equipment compared to a $0.9 million impairment charge in the second quarter of 2010.  Excluding these charges, operating expenses increased primarily due to increases in cost of service revenues, including higher fiber service provider charges reflecting growth in Ethernet services and fiber network expansion and higher depreciation expense.

    FTWR posted a net loss of $11.5 million for the second quarter 2011 was , compared to a net loss of $13.1 million for the comparable quarter last year.

    Second-quarter 2011 adjusted EBITDA net of ETL was $1.2 million, improving $2.2 million, compared to a negative $1.0 million in the second quarter of 2010.  Adjusted EBITDA is defined as net income (loss) from operations before interest, taxes, depreciation and amortization, impairment and restructuring charges, severance related to reduction in force, stock-based compensation, gain on early extinguishment of debt, debt exchange expenses and other income (expense).  The reconciliation of adjusted EBITDA, which is a non-GAAP financial measure, to net loss is provided at the end of this release.

    During the second quarter of 2011, cash consumption was $2.0 million, compared to $5.3 million in the second quarter of 2010.  Outstanding debt, including accretion, at June 30, 2011, was $168.5 million comprised of $133.1 million in the 9.0% Senior Secured Notes due 2016 and $35.4 million in the 9.0% Convertible Senior Secured Notes due 2012.

    Capital expenditures for the second quarter of 2011 totaled $3.9 million, compared to $6.5 million in the second quarter of 2010.  Based on the projects completed in the second quarter and the pipeline of new business, the Company is tightening its expected 2011 capital program range to $15-$17 million from $13-$17 million.

    Consolidated cash and cash equivalents at June 30, 2011, were $12.4 million, compared to $21.3 million at December 31, 2010.

    Thomas Scott, chief financial officer of FTWR, commented in the release: “We continued to execute our capital plan in the quarter, booking short payback, high-return projects as we work with our customers to rebuild revenue in light of churn.  Given the volatility we are experiencing, our visibility on 2011 revenue and Adjusted EBITDA remains low, preventing us from providing a specific financial outlook.  However, our liquidity at quarter-end reflects both ETL collections and our conservation of cash, and we continue to believe our cash position will be sufficient to cover our estimated liquidity needs at least through June 2012.”


    Financial Strength (31-Aug-2011)




    S&P 500

    Quick Ratio (MRQ) 1.39 1.34 0.75
    Current Ratio (MRQ) 2.39 1.49 1.45 1.10
    LT Debt to Equity (MRQ) 64.12 28.02 37.15 112.63
    Total Debt to Equity (MRQ) 64.40 38.07 47.41 152.79
    Interest Coverage (TTM) -1.77 0.02 0.10 22.84

    Source:, SEC Filings.

    Analyst Consensus

    No analyst recommendations and revisions data available.

    Technical Analysis


    FTWR is above the upper Bollinger Band, implying that it is currently extended from its recent trend. Be aware, however, that a cross outside of the Bollinger Bands can sometimes be a signal of trend strength and not, necessarily, trend reversal.

    FTWR’s MACD is currently indicating a weak bullish signal. Although the MACD is trending above the signal line, the indicator is still below 0, which suggests that the underlying moving averages are bearish.

    Comparative Analysis

    Company Name Ticker Price per Mrkt. Cap. P/E P/S
    Aug31-2011 symbol Share, $ $ Mn 2011 2012 2011 2012
    AT&T Inc. T 28.31 167.74B 11.89 11.10 1.33 1.31
    Level 3 Communications Inc. LVLT 1.85 3.29B n/a n/a 0.88 0.84
    Verizon Communications Inc. VZ 36.31 102.78B 16.21 13.97 0.93 0.89
    Comcast Corp. CMCSA 21.69 59.63B 13.56 11.36 1.06 0.99
    Wireless Communications Median       13.07 n/a 1.11 n/a
    FiberTower Corp. FTWR 1.12 52.02M n/a n/a 0.72 0.66

    Source: Thomson Financial

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