verizon

MCGRAW-HILL COMPANIES INC., $45.29, New York symbol MHP, rose 17% this week after it announced that it will split into two separate, publicly traded companies.

One of these new firms, McGraw-Hill Markets, will sell a variety of financial-information products. This business will include Standard & Poor’s, which provides credit ratings on bonds, and McGraw-Hill’s J.D. Power market-research firm. McGraw-Hill Markets will have annual revenue of $4 billion. International sales will account for 40% of that total.

The other company, McGraw-Hill Education, will publish textbooks for schools and colleges. This business will have $2.4 billion of annual revenue.

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AT&T INC., $28.05, New York symbol T, fell 3% this week after the Department of Justice said it would launch a court challenge to block the company’s deal to buy rival wireless carrier T-Mobile from Germany’s Deutsche Telekom AG. Adding T-Mobile would make AT&T the largest wireless carrier in the U.S., with 132 million subscribers. Regulators feel that the purchase would give AT&T too much control over the wireless market, and lead to higher rates for customers. AT&T is paying $39 billion ($25 billion in cash, and $14 billion in stock) for T-Mobile. That’s equal to 23% of AT&T’s $166.2-billion market cap. If the deal falls through, AT&T will pay Deutsche Telekom $3 billion, and give it the rights to some of its wireless spectrum....

QUAKER CHEMICAL CORP. $30 (www.quakerchem.com) has paid $10.5 million for the 60% of its joint venture in Mexico that it did not already own. It may have to pay an additional $2 million in July 2012, depending on certain circumstances. To put these figures in context, Quaker earned $9.8 million, or $0.79 a share, in the second quarter of 2011. This purchase should help the company sell more specialty chemicals to its automotive and steel customers, which continue to expand in Mexico. Buy. FRONTIER COMMUNICATIONS CORP. $7.30 (www.frontier.com) earned $0.06 a share in three months ended June 30, 2011. That’s down 68.4% from $0.19 a share a year earlier. These figures exclude unusual costs related to Frontier’s July 2010 purchase of 4 million traditional phone accounts from Verizon. Because of this purchase, revenue jumped 156.2%, to $1.3 billion from $516.1 million. Strong demand for high-speed Internet and video services is offsetting slower demand for traditional phone services. Hold. CEDAR FAIR L.P. $18 (www.cedarfair.com) reported that attendance at its 11 amusement parks and seven water parks rose 5% in July 2011 compared with July 2010. As well, each park guest spent 2% more than a year ago. That should help Cedar Fair meet its target 2011 payout of $1.00 a unit, for a 5.6% yield. Buy.

American Tower, $48.91, symbol AMT on New York (Shares outstanding: 400.3 million; Market cap: $19.1 billion; www.americantower.com), is the largest independent operator of wireless communications and broadcast towers. The company has 34,411 towers in the U.S., Mexico, Brazil, Chile, Colombia, Peru and India. American Tower leases its sites to wireless companies. AT&T, Sprint Nextel, Verizon Wireless and T-Mobile account for 74% of American Tower’s revenue. American Tower has just agreed to buy up to 2,126 towers in Colombia from Colombia Movil for $182 million in cash. American Tower will lease these towers, as well as new towers it plans to build in Colombia, back to Colombia Mobil....

TUPPERWARE BRANDS CORP., $62.49, New York symbol TUP, makes high-quality household products, including plastic food and beverage containers and educational toys. It also makes wide range of cosmetics, bath oils and fragrances. Tupperware reported better-than-expected quarterly earnings this week. However, the company makes many of its products from oil-based plastic resins, and the cost of these materials is rising. That will probably slow Tupperware’s earnings growth in the second half of 2011. That caused the stock to fall 12%. In the three months ended July 2, 2011, Tupperware’s sales rose 18.5%, to $669.9 million from $565.1 million a year earlier. The company gets over 70% of its sales from outside the U.S. If you exclude the positive impact of currency-exchange rates, sales would have risen 9% in the latest quarter. Earnings rose 34.4%, to $1.25 a share from $0.93. That beat the consensus estimate of $1.18 a share....

TUPPERWARE BRANDS CORP., $71.45, New York symbol TUP, has gained 174.8% since we first recommended it in the May 2007 Wall Street Stock Forecaster at $26. It’s also up 56.6% since we named it as our “#1 Stock of the Year” for 2011 in the January 28, 2011 Hotline. The company makes high-quality products for the home, including plastic food and beverage containers and children’s educational toys. It also makes wide range of cosmetics, bath oils and fragrances. Tupperware sells its products through independent dealers and over the Internet, instead of retail stores. This keeps its distribution costs down, and gives it greater flexibility to handle rising prices for plastic resins made from petroleum. As well, Tupperware continues to see strong growth in emerging markets like Brazil, Turkey and Indonesia....

Ciena Corp., $18.65, symbol CIEN on Nasdaq (Shares outstanding: 93.1 million; Market cap: $1.8 billion; www.ciena.com), makes networking equipment that lets phone carriers transmit files that contain large amounts of data, like video. AT&T and Verizon are the company’s major customers. Ciena’s shares recently took a big drop after the company reported a bigger-than-expected loss in the latest quarter. Excluding one-time items, the company lost $0.24 a share in the three months ended April 30, 2011, compared to a loss of $0.13 a share a year earlier. The latest figure was worse than the consensus estimate of an $0.11-a-share loss....

Demand for wireless services is rising sharply in North America. That’s partly because device makers continue to release new cellphones and other wireless devices, like the Kobo e-book reader and Apple iPad. As well, more customers are switching from traditional phones (or land lines) to wireless services. Smartphones, in particular, have become increasingly popular. Today’s top-selling smartphones are Apple’s iPhone, Research in Motion’s BlackBerry, and devices that run Internet search provider Google’s Android operating system....

It pays to be skeptical of companies that mainly grow through acquisitions. That’s because many purchases come with hidden problems that can hurt the buyer’s future earnings. The buyer can also weaken its balance sheet with excessive debt if it borrows heavily to fund an acquisition. However, we like AT&T’s recent purchase of rival U.S. wireless carrier T-Mobile. The company’s extra wireless frequencies (or “spectrum”) are a hidden asset that will help AT&T handle rising demand for wireless data as more people access the Internet with mobile devices, like smartphones. As well, AT&T has a long history of integrating new businesses. That cuts the risk of this purchase. AT&T INC. $31 (New York symbol T; Conservative Growth & Income Portfolios, Utilities sector; Shares outstanding: 5.9 billion; Market cap: $182.9 billion; Price-to-sales ratio: 1.5; Dividend yield: 5.5%; TSINetwork Rating: Average; www.att.com) gets 50% of its revenue from its wireless division, which has 97.5 million customers in the U.S. The wireline division, which supplies 48% of AT&T’s revenue, sells traditional landline phone services to 40.6 million customers in 22 states. It gets the remaining 2% by selling ads in phone directories....

ATLANTIC TELE-NETWORK $38.99 (Nasdaq symbol ATNI; TSINetwork Rating: Speculative) (340-777-8000; www.atni.com; Shares outstanding: 15.4 million; Market cap: $600.2 million; Dividend yield: 2.3%) provides telecommunications services to rural and other underserved markets in the U.S., Bermuda and Caribbean. In April 2010, Atlantic bought over 800,000 wireless accounts from Verizon Wireless for $200 million. The subscribers were mostly in rural areas of Georgia, Illinois, Ohio Idaho, and North and South Carolina....