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MasTec Inc. Reports Operating Results (10-K)

February 23, 2011 | About:

MasTec Inc. (NYSE:MTZ) filed Annual Report for the period ended 2010-12-31.

Mastec Inc. has a market cap of $1.24 billion; its shares were traded at around $16.27 with a P/E ratio of 19.1 and P/S ratio of 0.8. Mastec Inc. had an annual average earning growth of 39.3% over the past 5 years.Hedge Fund Gurus that owns MTZ: Bruce Kovner of Caxton Associates, Paul Tudor Jones of The Tudor Group, Jim Simons of Renaissance Technologies LLC, George Soros of Soros Fund Management LLC, Steven Cohen of SAC Capital Advisors. Mutual Fund and Other Gurus that owns MTZ: Chuck Royce of Royce& Associates.

Highlight of Business Operations:

The aggregate market value of the registrants outstanding common stock held by non-affiliates of the registrant computed by reference to the price at which the common stock was last sold as of the last business day of the registrants most recently completed second fiscal quarter was $516,382,533 (based on a closing price of $9.40 per share for the registrants common stock on the New York Stock Exchange on June 30, 2010).

We believe that as new unconventional shale gas reserves are developed, the demand for additional gas transport projects will grow. We also believe that U.S. energy policy goals will continue to promote domestic sources of energy in order to reduce U.S dependence on foreign energy sources, both for economic and national security reasons. According to the Interstate Natural Gas Association of Americas (INGAA) Natural Gas Pipeline and Storage Infrastructure Projections Through 2030 report, the U.S. and Canada will need from 28,900 to 61,900 miles of additional natural gas pipeline by 2030 to accommodate the anticipated changes in natural gas supply and demand. The INGAA report estimates that annual expenditures for pipeline infrastructure will average between $5 billion and $7.5 billion per year.

during that period. The ARRA allows wind and solar projects to elect to claim the investment tax credit equal to 30% of the cost of certain qualifying assets in lieu of claiming the production tax credit. The ARRA also includes a U.S. Treasury grant program which allows taxpayers that own production tax credit-eligible and investment tax credit-eligible facilities to receive grants from the U.S. Treasury equal to the amount of the investment tax credit that would otherwise be available to the facility. The accelerated depreciation provision for renewable energy generation assets provides for a five year depreciable life for these assets, rather than the 15 to 20 year depreciable lives of many non-renewable energy assets. First year bonus depreciation is also available for eligible renewable energy systems. Under this provision, 100% of the eligible basis may be deducted in the first year for eligible systems acquired and placed in service between September 8, 2010 and December 31, 2011 and 50% of the eligible basis may be deducted in the first year for eligible systems acquired and placed in service during 2012. Historically, incentives such as these have increased the construction activity in this sector and are expected to do so in the future. The ARRA also contains several provisions aimed at improving the electrical transmission system in the U.S., in part to facilitate the transfer of renewable energy from rural areas to high demand areas, including at least $6 billion in funds for renewable energy and transmission loan guarantees, which are expected to facilitate more than $60 billion in loans for these projects.

The United States electric transmission and distribution infrastructure requires significant ongoing maintenance, upgrades and extensions to manage power line congestion and avoid delivery failures. Demand for electricity is expected to continue to grow as the economy recovers and as the population grows. According to the 2010 Annual Energy Outlook published by the U.S. DOEs Energy Information Administration, the population of the United States will increase by about 28% from 2008 to 2035, with energy consumption increasing by a corresponding 14%. NERC reports in its 2010 Long-Term Reliability Assessment that peak demand for electricity in the U.S. is forecast to increase by approximately 14% over the next ten years. To accommodate the increase in demand, NERC estimates that 34,000 circuit miles will need to be added to the electrical transmission system in the U.S. over the next ten years. Significant capital investment in the U.S. transmission and distribution system will be required to meet the needs of the growing population as well as the projected increase in use of renewable resources. In 2008, the Edison Electric Institute (EEI) projected that $27 billion of investments in new transmission systems will be made from 2009 to 2013 and that approximately $300 billion of investments are expected over the twenty year period from 2010 to 2030.

New renewable energy generation projects, including wind and solar collection farms, are typically located in remote areas. Significant investment in new transmission lines will be required to connect this power to the electrical grid and transport it to more populated or industrial areas with higher demand. In a February 2010 report, the EEI estimated that $37 billion will be invested from 2009 through 2020 to address the integration of renewable resources through the addition or upgrade of nearly 13,000 circuit miles of transmission. One example of this is the Texas Public Utility Commissions 2008 approval of approximately $4.9 billion for the construction of electric transmission lines to carry power generated by new wind farms in remote western and northern parts of the state to major population and industrial centers in Texas. Also driving the growth in renewable energy related transmission growth are the current state level renewable portfolio standards. According to an October 2010 report by The Brattle Group, if the current renewable portfolio standards were increased to a 20% federal renewable portfolio standard, the investment requirement over the next 10 to 15 years would increase to between $80 billion and $130 billion.

growing to between 25 and 50 times current level of demand within 5 years. To serve this developing market and the ever-increasing need for more and faster bandwidth, voice, video and data services for fixed and mobile devices, service providers continue to upgrade the capacity and performance of their wired and wireless networks and are deploying competing networks using new technologies such as Worldwide Interoperability for Microwave Access, or WiMax. Investment is facilitated by declining equipment costs and expanded capabilities of wireline and wireless network equipment. At the same time, major regional and rural telecommunication companies are upgrading their networks from copper line to fiber optic line in order to enhance their ability to provide customers with bundled services that include video, voice and data. Similar dynamics of providers seeking to improve their offerings are prevalent in the cable and satellite markets as well. The ARRA has allocated $7.2 billion for the development of broadband facilities throughout the U.S. and the expansion of broadband access into areas that are currently not served by high-speed data networks, with $4 billion in grants awarded through September 30, 2010.

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About the author:

Charlie Tian, Ph.D. - Founder of GuruFocus. You can now order his book Invest Like a Guru on Amazon.

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