[June 19, 2009] Embarq (EQ) Tweet Jun 19, 2009 (Zacks.com via COMTEX) -- We maintain our Sell rating for Embarq (EQ), the fourth largest local telephone service provider in the U.S., as access line loss continues to erode traditional voice revenue, largely resulting in decreasing consolidated sales in the last quarter (below our expectations). Line losses have been accelerated with deactivations among business customers due to weak economic conditions. EQ has received shareholder approval as well as the required state regulatory authorization for its consolidation with CenturyTel under an $11.6 billion merger deal (expected to close in 2Q 2009). We believe that the local phone business in North America, in particular service offered by regional carriers, has significant challenges ahead as consumers and business customers migrate to alternative solutions including VoIP, wireless and cable offerings. Lower revenue forecasts for the second quarter of 2009 coupled with sustained access line losses support our thesis. We also believe pricing pressure and the need to invest further in broadband infrastructure may strain balance sheet conditions, considering EQ s limited liquidity and significant debt level. The Bear of the Day is one of the latest Sell recommendations from Zacks Equity Research. Our team of analysts consistently identify stocks set to outperform the market (Bull of the Day) and underperform the market over the next six months. Discover More Bear of the Day stocks. [ Back To TMCnet.com's Homepage ]