Cox Communications Inc. shares dropped nearly 20 percent Monday -- reaching a
four-year low, to boot -- after Credit Suisse First Boston Corp. analyst Lara
Warner downgraded the stock from 'strong buy' to 'hold' on concerns about
increased costs to reverse churn.
Warner, in her report, said she expected that increased selling, general and
administrative expenses connected with Cox's efforts to reduce churn 'will
continue to make margin expansion difficult.'
Those costs -- about $12 million in the second quarter -- are being driven
higher due to 'product-installation costs that in the past have been capitalized
but going forward must be expensed if it is not the first visit to that
Cox shares plunged to a low of $19.75 each Monday -- their lowest point since
March 31, 1998 -- before climbing to close at $20.19 (down 19.75 percent, or
The rest of the cable sector finished the day in the red, as well, with
Comcast Corp. the second-biggest loser for the day, closing at $16.80 per share,
down $2.76 each.
Rounding out the sector were Charter Communications Inc. ($2.64, down 33
cents), Cablevision Systems Corp. ($7.54, down 47 cents), Insight Communications
Co. Inc. ($7.85, down $1.65), Mediacom Communications Corp. ($4.43, down 77
cents), AOL Time Warner Inc. ($9.95, down 35 cents) and AT&T Corp. ($8.69,
down 91 cents).