RM LAW, P.C. announces that a class action lawsuit has been filed on behalf of all persons or entities that purchased Frontier Communications Corporation (NASDAQ: FTR) (“Frontier” or the “Company”) securities between April 1, 2016 and May 2, 2017, inclusive (the “Class Period”).
Frontier shareholders may, no later than November 27, 2017, move the Court for appointment as a lead plaintiff of the Class. If you purchased shares of Frontier and would like to learn more about these claims or if you wish to discuss these matters and have any questions concerning this announcement or your rights, contact Richard A. Maniskas, Esquire toll-free at (844) 291-9299 or to sign up online, click here.
Frontier provides communications services in the United States, including broadband, video, and voice services. According to the Company, it acquired the wireline operations of Verizon Communications, Inc. (the “Verizon Acquisition”) in California, Texas and Florida on April 1, 2016, for a purchase price of $10.5 billion in cash and assumed debt. Throughout the Class Period defendants allegedly failed to disclose the underperformance of the Verizon Acquisition.
The Complaint alleges that throughout the Class Period, Defendants made materially false and misleading statements regarding the Company’s business, operational and compliance policies. Specifically, Defendants made false and/or misleading statements and/or failed to disclose that: (i) the Company acquired a substantial number of non-paying accounts as part of its acquisition of the wireline operations of Verizon Communications, Inc.; (ii) as a result, the Company would be required to increase its reserves, and write-off amounts from accounts receivable associated with the non-paying accounts; and (iii) as a result of the foregoing, Frontier’s public statements were materially false and misleading at all relevant times.
On February 27, 2017, the Company disclosed a net loss of $80 million for the fourth quarter of 2016, and stated that its results were impacted by the “resolution of nonpaying acquired CTF accounts.” Chief Executive Officer (“CEO”) Daniel J. McCarthy (“McCarthy”) elaborated, stating: “Results for the fourth quarter were impacted by our intensified efforts to resolve acquired accounts in California, Texas and Florida that we have determined to be non-paying.”
On that same day, February 27, 2017, the Company held a conference call to discuss its financial results. On the call, Defendant McCarthy stated that the Company had been working through the account cleanup process since July 20, 2016, that the Company began disconnecting non-paying accounts at the end of August 2016, and that the disconnects continued through the first quarter of 2017. McCarthy further stated that the Company began to reserve aging accounts in accordance with in normal policies in Q2 2016 and then increased its reserves. Finally. McCarthy stated that the Company began permanent disconnects and receivable write-offs in the third quarter of 2016, and continued them in the fourth quarter of 2016.
On this news, the Company’s stock price fell $0.36 per share, almost 11%, to close at $2.93 per share on February 28, 2017, on unusually heavy trading volume.
On May 2, 2017, the Company reported a first quarter 2017 net loss of $75 million and a year-over-year first quarter revenue decline of $53 million. On the same day, the Company held a conference call to discuss its first quarter financial results. On the call, Chief Financial Officer Ralph Perley McBride (“McBride”) stated that approximately $16 million of the sequential revenue decline was a result of cleanup of CTF non-paying accounts and the automation of legacy non-pay disconnects. Specifically, he stated that “[Ole CTF account cleanup reduced Q1 revenue by $11 million, and the one-time impact related to automating the non-pay disconnect process for the legacy properties, reduced Q1 revenue by $5 million.]”
On this news, the Company’s stock price fell $0.32 per share, or more than 16%, to close at $1.61 per share on May 3, 2017, on unusually heavy trading volume.
If you are a member of the class, you may, no later than November 27, 2017, request that the Court appoint you as lead plaintiff of the class. A lead plaintiff is a representative party that acts on behalf of other class members in directing the litigation. In order to be appointed lead plaintiff, the Court must determine that the class member’s claim is typical of the claims of other class members, and that the class member will adequately represent the class. Under certain circumstances, one or more class members may together serve as “lead plaintiff.” Your ability to share in any recovery is not, however, affected by the decision whether or not to serve as a lead plaintiff. You may retain RM LAW, P.C. or other counsel of your choice, to serve as your counsel in this action.