Cincinnati Bell Shares Drop After Downgrade

NEW YORK (AP) — Shares of Cincinnati Bell Inc. lost ground Tuesday after a Raymond James analyst downgraded the stock, citing the company's rising stock price and a recent promotional deal on Internet and phone service.

In a note to clients, Raymond James analyst Frank Louthan cut his rating to "Underperform" from "Outperform."

Cincinnati Bell's new "Why Pay for Two" promotion, which runs though the end of the year, offers customers Internet access at home via DSL connection as well as on mobile devices for $39.99 a month.

Louthan said the promotion will effectively cut revenue from the DSL and phone data plans in half. He expects the offer to help the company's "churn," or customer turnover, but hurt its average revenue per customer and profit margin.

He also takes it as a sign of rising competition.

Noting the nearly 73 percent rise in Cincinnati Bell's stock year-to-date, he said, "We do not expect shares to outperform to the same extent going forward, especially with continued competitive pressure."

Shares dropped 24 cents, or 7.2 percent, to $3.09 in afternoon trading.