Goldman Sachs on CVG's Announcement To Sell Holdings To AT&T

Goldman Sachs has published a research report on Convergys Corporation (NYSE: CVG) after the company's announcement to sell its holdings in Cincinnati SMSA after market close yesterday.

In the report, Goldman writes, "After the close (6/2/11), CVG announced that it will sell its holdings in Cincinnati SMSA and Cincinnati SMSA Tower Holdings (“cellular partnerships”) to AT&T (NYSE: T) for approximately $320 mn in cash ($250 mn net of tax). The company noted that the sale does not require regulatory approvals, as AT&T already has majority control of the cellular partnerships. CVG expects the transaction to close in early July, 2011."

Goldman goes on to say, "We view the announcement as a neutral event, as it does not affect the operating performance of CVG's core businesses or its revenue and operating profit outlook. From a fundamental perspective, we remain guarded on CVG shares on limited growth prospects and low relative sector rank. Although we acknowledge management's ongoing efforts in driving efficiencies, CVG's revenue performance remains sluggish, and we see persisting revenue headwinds from the deflationary impact of offshore and increased competition."

Goldman maintains its Sell rating and current price target.