Update: Windstream 2Q Net Income Down 65 Percent

by Lance Turner  on Thursday, Aug. 7, 2014 7:19 am  

Windstream Holdings Corp. of Little Rock on Thursday reported second-quarter net income of $14 million, or 2 cents per share, down 65 percent from $40 million, or 6 cents per share, the same quarter last year.

Revenue for the telecommunications firm, which last week announced plans to spin off some assets into a separate company, dropped 2 percent to $1.47 million.

Analysts expected earnings of 8 cents per share and revenue of $1.48 million, according to Thomson Reuters.

"Overall results were solid and largely in-line with our expectations," CEO Jeff Gardner said in a news release (PDF). "Importantly, the progress made during the first half of 2014 has positioned us well to reach our goals for the year. In addition, our plans to spin off certain assets will allow Windstream to accelerate network investments, provide enhanced services to customers and maximize shareholder value."

Windstream, a spinoff company of Alltel Corp., has been steadily moving away from its wireline telecommunications business and toward a business-focused, enterprise communications services provider. In the news release, Gardner noted improved results in the company's enterprise and small-business sales. Consumer broadband services revenue also increased from the same quarter last year.

"We are successfully executing on our key priorities this year to accelerate growth opportunities and strengthen our position as a leading provider of enterprise communications services," Gardner said. "We have expanded our business marketing programs to strengthen sales and are seeing continued solid sales momentum and positive trends supporting our efforts to move up-market."

The company reported enterprise and small-business service revenue of $749 million, "a slight increase sequentially and year-over-year." Data and integrated services increased by 3 percent in the second quarter from the same time last year to $418 million on sales of IP-based services and next-generation data. Data center and managed services revenue reached $31 million, up 20 percent from the same time last year.

Quarterly consumer broadband service revenue rose 0.4 percent to $121 million. Overall consumer service revenue in the second quarter was down 2.8 percent to $317 million from the same time last year

The REIT

During a conference call with analysts to discuss earnings, Windstream also shed more light on plans, announced last week, to create a publicly traded real estate investment trust with some of its fiber and copper wire assets.

Windstream has billed the arrangement as a way for it to accelerate investments in its network, provide enhanced services to customers, pay off $3.2 billion in debt and maximize shareholder value.

Executives have said the new company, set to debut in the first quarter of next year, would seek to buy the copper and fiber assets of other telecommunications firms, growing the REIT and its earnings for investors.

 

 

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