Bell Canada (TSE:BCE) Plunges After Layoff Plans, Station Sales Emerge - TipRanks.com

Remember that episode of “The Simpsons,” where Ned Flanders explains the difference between apple juice and apple cider? And then notes that, in Canada, the whole thing’s “flip-flopped?” Well, that’s what happened today as Bell Canada (TSE:BCE) announced plans for huge layoffs and the sale of several of its radio stations. Shares plunged just under 5% in Thursday afternoon’s trading as a result.

Bell Canada noted that it planned to nearly decimate its workforce, cutting jobs by 9% and seeing around 4,800 folks out the door as a result. It’s the largest “workforce restructuring” effort Bell Canada has engaged in in the last 30 years, reports note. The move would also produce cost savings between $150 million and $200 million Canadian. Indeed, there would be cuts all through Bell Canada, with the internet—mobile and stationary—business taking hits, as well as multiple Canadian media brands ranging from CTV to Crave and beyond. Plus, Bell Canada would also divest 45 radio stations, sending the regional stations into the hands of the likes of Durham Radio, Maritime Broadcasting, and several others.

Like a Lead Balloon

It’s easy to wonder what happened here. Basically, Bell Canada announced plans to save a pot of cash on one hand—normally a welcome move in US stocks—and bring in a big slug of fresh capital by selling some properties on the other. That should have been welcomed by investors, but instead, they sold off. It’s worth noting that this isn’t the first time that Bell Canada cut jobs and sold radio; it did something similar back in June. It might be that investors are starting to get concerned about how Bell Canada makes money going forward if it keeps dropping revenue sources. But then, those channels might not have been all that productive to begin with; a Statista study suggests that ad revenue for radio in the US and Canada will increase around 3.7% in the next four years, but that’s bolstered by political ad spending.

Is Bell Canada a Good Stock to Buy?

Turning to Wall Street, analysts have a Moderate Buy consensus rating on TCE:BCE stock based on three Buys and seven Holds assigned in the past three months, as indicated by the graphic below. After a 10.94% loss in its share price over the past year, the average TCE:BCE price target of $57.60 Canadian per share implies 13.3% upside potential.

Disclosure