Windstream 1Q Net Earnings Double

by Luke Jones and Lance Turner  on Thursday, May. 10, 2012 8:30 am  

Windstream Corp. of Little Rock on Thursday reports that first-quarter net income more than doubled, reaching $65 million as the company realized boosts to broadband revenue after its 2011 purchase of Paetec Holding Corp.

Windstream said first-quarter earnings of $65 million or 11 cents per share, up from $29 million or 6 per share in the first-quarte of 2011. Total revenue and sales hit $1.5 billion, up from about 1 billion last year.

"Our business and consumer channels delivered a strong performance during the first quarter," Jeff Gardner, president and CEO of Windstream, said in a news release.

"The business channel has gained significant traction with the acquisition of Paetec, and our combined team is having tremendous success driving new sales opportunities. Our consumer business also had a very solid quarter driven by growth in broadband service revenues and continued success with our bundling strategy."

The telecommunications company, which held its annual meeting in Little Rock on Wednesday, completed the $2.3 billion purchase of Paetec in December. The deal expanded Windstream's geographic footprint and added to its fiber network, allowing the company to build out its broadband business.

Launched as a spinoff of wireless company Alltel, Windstream began primarily as a wireline telecommunication company. But it has rapidly expanded into more profitable, growing businesses, mainly broadband services for consumers and business.

On Thursday, the company noted that business and consumer broadband revenues represented about 68 percent of its total revenue and sales in the quarter.

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In a conference call with investors, Gardner said he was "incredibly pleased" with Windstream's performance in its core business.
 
"These outstanding results are a testament to the entire business sales team and to the value proposition Windstream offers its business customers," he said. 
 
Gardner did note that wholesale revenue declined "more than expected" due to the suspension of some wholesale Paetec products.
 
CFO Tony Thomas said the discontinuation was related to carrier disputes that arose when Windstream acquired Paetec last year. A court filing in mid-March, Tony said, attempted to clarify the basis of the disputes.
 
"The court filing was unfavorable to Windstream," Thomas said. "We do not agree with it."
 
Thomas said his comments on that issue were limited due to the ongoing negotiation. Besides that, however, Gardner stressed that he was very pleased with the Paetec acquisition.
 
"Paetec brought a tremendous level of expertise," he said. "It's really introducing Windstream to new sales capabilities."
 
Gardner said he wants to grow Windstream for the long term.
 
"I'm very encouraged with long term prospects," he said. "We're accelerating growth rates and have continued stability in our consumer business. 2012 is all about execution. We're integrating Paetec and positioning the business for long-term success."

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Video: Windstream CEO Jeff Gardner on CNBC Wednesday, speaking against a proposed change to the tax on dividends.

 

 

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