CenturyLink Stock Hits Historic Low, Company Misses Level 3-Related Filing Deadline

CenturyLink‘s stock plummeted past a 20-year low Monday after it reported it’s unable to meet the deadline for filing its 10-K with the Securities and Exchange Commission (SEC).

CenturyLink has asked the SEC to extend the deadline for filing its 2018 annual report, which was due March 1. Edward Jones downgraded CenturyLink‘s stock to “sell” after the delay.

The telecommunications giant posted weaker-than-expected fourth quarter earnings last month, while cutting its dividend by more than one-half to just $1 per share, as it moves to cut its overall debt load from approximately $35.4 billion, according to TheStreet.

The filing delay resulted from CenturyLink’s acquisition of Level 3 Communications in 2017.

“The principal reason for the delay is that recently identified material weaknesses in internal controls over the company’s revenue-recording processes and the procedures for measuring fair value of assets and liabilities assumed in connection with the Level 3 Communications acquisition have created the need to conduct additional review and testing with respect to those processes prior to finalizing the assessment and the audits of the effectiveness of internal control over financial reporting as of December 31, 2018, and of the company’s financial statements as of and for the year ended December 31, 2018,” CenturyLink said in its SEC request.

CenturyLink currently does not expect any material changes to the financial results disclosed in the company’s earnings release on Feb. 13. Also, more information about the material weaknesses in internal controls will be provided in the 10-K, it said.

Not everyone is pessimistic about CenturyLink. Timothy Horan, managing director at Oppenheimer, said CenturyLink’s 10-K has a “95 percent likelihood” of being issued in two weeks, and the company will not have
to restate earnings.

“We are still ‘outperform’ (expected to outperform the S&P 500 within the next 12-18 months) on CenturyLink given its strong ability to pay down debt and execute on cost savings to stabilize free cash flow and capital return to shareholders,” he said.