by Lance Turner
Posted 8/9/2012 07:11 am
Updated 9 months ago
Windstream Corp. of Little Rock on Thursday reported second-quarter net income of $54 million or 9 cents per share, down 44 percent from the $97 million or 19 cents per share it reported during the same quarter last year.
The telecommunications company (Nasdaq: WIN) said quarterly revenue rose 50 percent, reaching $1.5 billion during the quarter. It said quarterly profit was affected by $12 million in after-tax merger and integration expenses and $6 million in restructuring costs. Without those costs, earnings per share would have reached 12 cents.
Those expenses and costs stem from the company purchase of Paetec Holding Corp., which it completed in December. Following the merger, Windstream has begun restructuring management, eliminating redundencies and seeking great efficiency in decision making. Part of the plan includes cutting up to 400 management positions, a move Windstream announced earlier this year.
"As a result of continued sales success in our business channel, as well as expected cost savings from the Paetec acquisition and our management reorganization, we expect to see sequential improvement in revenue and adjusted OIBDA for the remainder of the year, particularly in the fourth quarter," CEO Jeff Gardner said.
On Thursday, Windstream said the reorganization is expected to be complete in the third quarter and result in annualized savings of about $30 million-40 million. The company also said it's on track to achieve operating synergies of $50 million in 2012 and $100 million in total by the end of 2014 related to the Paetec acquisition.
Business Services Rise
In its news release, the company pointed out a 2 percent increase in business service revenue at $893 million, and a 4 percent increase in consumer broadband service revenue at $114 million.Among its business services, data and integrated services revenue reached $377 million, up 8 percent from the same time last year on a pro forma basis. Windstream said the growth was driven by IP, next generation data and data center services.
Carrier service revenue hit $164 million, up 5 percent on a pro forma basis, largely due to fiber-to-the-tower site installations and continued demand for additional circuits for wireless backhaul services.
Windstream, a company whose bread and butter was once wireline telephone services, has steadily moved its focus into broadband and data services for business. On Thursday, the company said business and consumer broadband revenues represented about 68 percent of Windstream's total revenue and sales in the quarter, collectively growing 2.5 percent year-over-year.
Also, on Wednesday, the company announced its 25th consecutive 25-cent stock dividend.