NEW YORK Shares in rural telecom service provider CenturyLink Inc (CTL.N) fell sharply on Thursday after the company said it was cutting its dividend by 25 percent and posted weaker than expected quarterly results.
On top of that, a labor union, the Communications Workers of America, said its board had authorized it to set a strike date for its 13,000 CenturyLink members.
Macquarie Securities analyst Kevin Smithen downgraded the stock to "underperform" after the company said it would cut its quarterly dividend to 54 cents from 72.5 cents while it promised to buy back $2 billion of shares by February 13, 2015.
Smithen said that higher than expected capital spending guidance and weaker than expected earnings targets "added to the pain felt by income and yield investors."
Ratings agency Fitch downgraded its credit rating for the company after the dividend news. CenturyLink also announced quarterly earnings and revenue that were lower than Wall Street expected.
CenturyLink shares were down $8.02 or 19 percent to $33.67 on the New York Stock Exchange.
(Reporting By Sinead Carew; Editing by Kenneth Barry)