Shaw Communications, Inc. (SJR) is trying to increase its revenues by boosting its operations in the North America data center sector through the acquisition of ViaWest Inc.
Near-term catalysts include high-speed Internet and telephony subscriber gain, expansion of Shaw Go Wi-Fi networks, and increased number of applications supporting the Shaw Global Go TV Everywhere service.
The company reported mixed financial numbers in the fourth quarter of fiscal 2014 with the top line missing the Zacks Consensus Estimate and the bottom line surpassing the same.
Shaw Business – a division of Shaw Communications – plans to upgrade its Managed WiFi solution for clients operating in the hospitality industry. With the new Managed WiFi solution slated to be available from Jan 2015, hotels, inns, resorts, casinos and conference centers will be able to access Shaw Business’ unmatched WiFi capabilities.
Shaw Communications has sealed its previously declared acquisition of ViaWest Inc. for $1.2 billion. The takeover of this Colorado-based data-center provider will help Shaw Communications expand its data services and cloud capabilities business. ViaWest has 27 data centers in eight western U.S. markets which include Dallas, Denver, Las Vegas and Minneapolis. The company has gained significant synergies from its initial set-up of only five data centers in two markets.
For fiscal 2015, management expects both total revenue and operating income before amortization to grow 5–7% year over year. Free cash flow is projected at $650 million. In order to boost its overall productive efficiency, Shaw Communications plans to streamline its organization structure into three segments, namely, consumer, business and media.
On the downside, Shaw Communications exited the fiscal fourth quarter with nearly $4.3 billion debt as compared with $3.5 billion in the prior-year quarter. Moreover, the maturity of nearly $1.3 billion debt over the next four years will further pressurize the company’s cash flow.
Shaw Communications currently has a Zacks Rank #3 (Hold).
Other Stocks to Consider
Some better-ranked stocks that warrant a look in the related sector are LIN Media LLC (LIN), Liberty Global plc (LBTYA) and Sirius XM Holdings Inc. (SIRI). LIN Media and Liberty Global sport a Zacks Rank #1 (Strong Buy), while Sirius XM carries a Zacks Rank #2 (Buy).
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