Here are my estimates for 2014:
Q1 2013:
Revenues: $1,273 Million (+5.0%)
Gross Profit: $840
Expenses: $808
Operating Income: $32
Interest Expense (excluding make whole premiums from conversions which are one time expenses): $32
Net Income (Loss): $(0) Million
Diluted EPS: $(0.03)
Q2 2013:
Revenues: $1,357 Million (+6.0%)
Gross Profit: $912
Expenses: $862
Operating Income: $50
Interest Expense (excluding make whole premiums from conversions which are one time expenses): $29
Net Income (Loss): $21 Million
Diluted EPS: $1.00
Q3 2013:
Revenues: $1,357 Million (+6.0%)
Gross Profit: $919
Expenses: $863
Operating Income: $56
Interest Expense (excluding make whole premiums from conversions which are one time expenses): $29
Net Income (Loss): $27 Million
Diluted EPS: $1.30
Q4 2013:
Revenues: $1,289 Million (+6.0%)
Gross Profit: $863
Expenses: $818
Operating Income: $45
Interest Expense (excluding make whole premiums from conversions which are one time expenses): $29
Net Income (Loss): $16 Million
Diluted EPS: $0.75
Some Assumptions:
*Network improvements are approved and are in full effect in 2014. Improvements yield $6 million per quarter in cost savings.
*Conversions reduce int expense by $3 Million in Q1 2014, then $6 million per quarter thereafter as they are fully converted.
*Margins are 66% in Q1, 67.25% in Q2, 67.7% in Q3, and 67.0% in Q4
*Expenses as % of revenue are the same as they were in Q4 2012.
*Assumption is all convertible notes have converted in calculation of EPS. Therefore, I'm using 21 million shares outstanding.
*My top line growth estimates of 5.9% for the year are below street estimates of 10% for conservative reasons.
*I'm not taking into account possible debt refinancing resulting in lower interest expense which would happen if they can return to sustained profitability. This could reduce interest expense by at least 10% (i.e., $0.60+ EPS boost)
