In 2008, Altria (MO) spun off Philip Morris International (PM) with hopes of unlocking value from its faster-growing international business, which was underappreciated by investors who worried about the decline in U.S. cigarette consumption and the threat from tobacco litigation. Now, more than a decade later, both companies announced on August 27 that they are exploring a possible reunion (see Altria's press release here and PM's statement here). Very few details are available about the proposed combination, and both companies have said there can be no assurance that any deal will result from these discussions. After all, any transaction would be subject to the approval of the two companies’ shareholders, and the market didn't like the news.

Home Depot (HD) began operating in 1978, 32 years after Lowe’s (LOW) was founded. Despite its later start date, Home Depot is now the world’s biggest home improvement retailer with over $100 billion in annual sales. The company has more than 2,200 retail stores and maintains the number one market share position in the U.S., Mexico, and Canada.Home Depot’s stores carry around 35,000 items covering a wide variety of building materials, lawn & garden products, and home improvement products. Its online catalog maintains over 1 million products. Online sales represent about 8% of Home Depot’s total revenue.

Founded in 1832, Bank of Nova Scotia (BNS) is one of Canada's largest and most diversified banks. The firm provides a broad range of products and services, including personal and commercial banking, wealth management and private banking, corporate and investment banking, and capital markets.   The bank, commonly referred to as Scotiabank, generates about 56% of its revenue from net interest income (i.e. lending operations), with the remaining 44% from non-interest income sources including credit card fees, mutual funds, investment management, underwriting fees, trading revenues, and more. Scotiabank has three business units: 

Founded in 1911, Eaton (ETN) is an industrial conglomerate that provides a wide range of energy-efficient products and systems. The company's solutions help customers manage power across electrical, hydraulic, and mechanical applications. Eaton operates in five main business segments:  Electrical Products (33% of sales, 36% of profits): consists of electrical components, industrial components, residential products, single phase power quality, emergency lighting, fire detection, wiring devices, structural support systems, circuit protection, and lighting products. Electrical Systems & Services (28% of sales, 25% of profits): power distribution and assemblies, hazardous duty electrical equipment, explosion-proof instrumentation, utility power distribution, power reliability equipment. The markets for these segments are industrial, institutional, governmental, utility, commercial, residential and information technology. 

Incorporated in 1968, CenturyLink (CTL) started off as a regional telecom company. Thanks to a series of large acquisitions over the years, CenturyLink is now one of America’s largest telecom services provider with about 10 million customer connections.Today CenturyLink operates through two business units: Business Segment (75% of revenue): provides internet, hybrid networking, cloud connectivity, security solutions, and voice services (about 20% of segment revenue) to businesses, governments, and wholesale customers. Consumer Segment (25% of revenue): provides broadband internet (50% of segment revenue), voice (landline phones – about a third of segment revenue), video, and other services to residential homes. 

Founded in 1983 as SBC Communications (the company bought AT&T in 2005 and adopted the more famous moniker), AT&T is a telecom and media conglomerate that operates four business segments: Communications (77% of revenue, 79% of operating income):provides wireless and wireline (phone and internet) services to consumers and businesses, as well as paid video (streaming, U-verse, DirecTV). Wireless services account for just over 50% of AT&T's total operating income. Pay-TV and voice services, two areas in secular decline, represent less than 15% of company-wide profits. WarnerMedia (18% of revenue, 20% of operating income): consists of all Time Warner assets, including Turner Cable TV channels, HBO, and Warner Brothers studios. AT&T acquired Time Warner for $85 billion in June 2018.

Founded in 1983 as Bell Atlantic, Verizon (VZ) is the largest wireless service provider in the U.S. The company’s 4G LTE network is available to more than 98% of the U.S. population. At the end of 2018, the company counted 118 million devices connected to its extensive wireless network.Wireless operations, which include voice and data services as well as equipment sales, generate close to 70% of Verizon’s revenue and account for nearly 90% of the company’s EBITDA (a proxy for cash flow).Wireline operations account for 23% of the company’s revenue but only about 12% of Verizon's EBITDA. This less-profitable segment includes traditional voice offerings, as well as pay-TV and internet services.Verizon has paid uninterrupted dividends for over 30 consecutive years [...]

Bell Canada Enterprises was founded in 1880 and changed its name to BCE (BCE) in 1983. The firm is one of Canada's big three telecom companies and provides wireless, wireline, internet, and television services to residential, business, and wholesale customers across the country.  BCE organizes its business into three segments:  Bell Wireless (37% of sales, 52% of operating profit): provides wireless voice and data services and equipment. BCE's 4G LTE network covers 99% of the Canadian population coast to coast. This is the fastest-growing and highest-margin part of the company. Bell Wireline (51% of sales, 37% of operating profit): broadband internet, satellite TV, and IPTV services account for 36% of company-wide sales, with home phone services accounting for the remaining 15% of revenue housed [...]

Formed in 1990, Telus (TU) is one of Canada’s major telecom businesses and a leading wireless provider. The firm's operations are grouped into two segments: Wireless (57% of revenue, 66% of EBITDA): Telus's 4G LTE network covers 99% of Canada's population. The company makes money by selling voice and data services and equipment. Wireline (43% of revenue, 34% of EBITDA): primarily sells high-speed internet, home phone, and cable TV services. Home phones are in secular decline but only account for about 10% of company-wide revenue, so this segment has continued reporting growth despite this exposure. Telus's Wireline business also includes healthcare technology solutions, home security, and managed IT and business process solutions.  Telus has paid dividends since 1999, although the firm cut its [...]

Kraft Heinz (KHC) shares plunged 9% yesterday after the packaged food maker reported weak first-half earnings results. Organic sales declined 1.5%, adjusted EPS fell 24%, and management pulled 2019 guidance. We previously reviewed the challenges Kraft Heinz's business is facing. Underinvestment in product development and marketing, fading brands, and too much debt are some of the key issues. For more information, please see our past notes here: