Cash Flow Adequate for Dividend, Windstream CEO Says

by Gwen Moritz  on Wednesday, May. 7, 2014 4:10 pm  

Jeff Gardner, CEO of Windstream Holdings Inc.

Windstream Holdings Inc. still has sustainable free cash flow to support its investor-attracting $1 annual dividend, shareholders were assured during the Little Rock telecom's annual meeting on Wednesday.

An encouraging report from CEO Jeff Gardner followed a meeting of the board of directors, at which the 32nd consecutive quarter dividend of 25 cents was approved. Gardner said the company has sustainable free cash flow of about $830 million a year.

The dividend represents a yield of about 11 percent at Windstream stock's recent price in the $9 range, but its sustainability has long been questioned by analysts.

"Sweet spot" was Gardner's catchphrase, one he used at least four times during the short meeting to refer to the part of the business services market that represents future growth for Windstream. The ideal customer has multiple locations in several markets and spends $5,000 to $100,000 a month on telecommunications and network services.

In a $67 billion market for business enterprise products, Windstream currently has about 4 percent market share, Gardner said.

Windstream, originally the wireline division of Alltel Corp. that was spun off eight years ago, has been transitioning away from traditional telephone services to business services, and those strategic growth products now account for 72 percent of revenue. The company opened its 27th data center last week in Charlotte, North Carolina.

The business session of the meeting was marked by proposals rejected by stockholders, including some that the board of directors favored and some it opposed.

Three board-sponsored proposals to change the corporation's bylaws and certificate of incorporation were approved by a large majority of the shares voted, but did not receive a two-third supermajority of the shares outstand, and were therefore defeated. One of those proposals would have changed that supermajority vote requirement, but it was defeated for lack of a supermajority.

Two shareholder proposals that were opposed by the board were also defeated: One would have prohibited accelerated vesting of stock awards in case the company were sold, the other would have allowed shareholders to take action by written consent rather than having to wait for the annual meeting or for action by the board.



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