Windstream Puts Focus on Growth

by Robert Bell  on Monday, Apr. 25, 2011 12:00 am  

Jeff Gardner, Windstream Corp. CEO and president, said the company?s focus on broadband and business services was part of a five-year plan to grow the company?s revenue.

Since it was spun off from Alltel Corp. in 2006, Windstream Corp. has transformed itself from a company that largely provided landline phone service to rural areas into one that offers an array of data and communication products and services to consumers, businesses and even the big wireless carriers. Of course, this wasn't something that just happened.

"What happened over the last five years was clearly part of a five-year plan we put together to pretty radically change the focus at Windstream," said Jeff Gardner, president and CEO. The plan called for concentrating "on areas that were growing, to put us in a position to pay our dividend for a long time and show investors that we can grow the top line of this company."

As consumers continue to abandon their traditional landlines in favor of wireless and Internet-based phones, historically rural carriers like Windstream and Frontier Communications have seen revenue declines. Excluding lines gained through acquisition, Windstream lost about 122,000 voice lines in 2010.

According to a recent Associated Press story, Arkansas and Mississippi lead the nation in the number of adults - about 35 percent in each state - who depend solely on cell phones.

Windstream's 2010 revenue declined 2.2 percent to $4.1 billion. For 2011, the company predicts revenue that is no better than flat and could be down as much as 3 percent from last year.

But analysts who spoke to Arkansas Business said that for 2011, Windstream could see organic growth - that is, revenue increases that aren't purely a result of acquisitions, of which Windstream has made north of $4.5 billion.

"I think probably 2011 and 2012 are very interesting years for the company, because I think they will begin to show some positive organic growth in the business as enterprise services overtakes residential services," said Barry McCarver, senior vice president of equity research with Stephens Inc.

Donna Jaegers, vice president and senior research analyst with D.A. Davidson of Great Falls, Mont., was also upbeat on Windstream's future.

"I think it's bright," she said. "I think what they've done in the last two years to really change the complexion of the company and morph it more into business services and broadband is going to enable them to actually show positive revenue growth in 2011, compared to their peers Frontier and Century that are just trying to slow down the shrinkage."


Pushing Data Services

One area in which Windstream has made a big push is data services, such as data backup, managed hosting and cloud computing, evidenced by its recent $310 million all-cash purchase of Hosted Solutions of Raleigh, N.C.



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