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.

Instead of each unit having its own satellite, Windstream installs one large dish at the site to serve each unit through existing coax. The apartment owners pay Windstream a bulk rate, build the cost into the rent price and make money on the margin, he said.

 

Dividends and Revenue

A big part of what has attracted investors to Windstream has been the $1 dividend the company has paid each year since it was spun off.

"It's very important to our shareholder base," CFO Tony Thomas said of the dividend.

Windstream's stock has fluctuated between $6.02 and $14.40 in the last year and opened Thursday at $12.53. While the company's shareholders "also want stock appreciation - and we're working to get that back into the stock over the course of 2011 - we are absolutely committed to paying that dollar dividend," Thomas said.

Since Windstream was spun off on July 17, 2006, the company's stock has paid out about $4.70 per share in dividends, including a prorated dividend in its short first quarter of independent operation. Its stock price has fluctuated and is up about $1 over its debut price of $11.50.

Alltel stockholders got 1.04 shares in Windstream for every Alltel share they owned. When the spin-off was announced on Dec. 8, 2005, Alltel shares were worth $64.82. They closed at $53.65 on the day the spin-off was completed, the sum of the parts being valued at about 1.2 percent more than the combined Alltel.

Of course, Alltel stockholders subsequently realized a big gain when that company was taken private in 2007 and they were paid $71.50 per share.

McCarver, of Stephens Inc., offered a long-term view of Windstream in which the company attracts investors based on stock appreciation, in addition to the attractive dividend.

"The company still views the dividend as the most important vehicle for providing shareholder return, so I think the dividend is very safe and will be around forever," he said. "But we're closing in on a period in the company's history since their spin-off that they could put up some positive revenue and positive [pre-tax earnings] and net income," he said.

The growth will likely be a result of the revenue mix at Windstream shifting away from residential voice service in favor of increased broadband and business services. For 2010, that mix was about 60-40, with broadband and business making up the bigger share.

 

 

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