Windstream Reports $101.5M 3Q Loss

Windstream Reports $101.5M 3Q Loss

Windstream Holdings Inc. of Little Rock on Thursday reported a third-quarter loss of $101.5 million, or a loss of 55 cents per share, compared with a $66.2 million loss, or loss of 72 cents per share in the same quarter of last year. 

The results missed analysts' expectations of a loss of 46 cents per share.

The publicly traded telecommunications company (Nasdaq: WIN) reported revenue of $1.5 million, up 11 percent from the third quarter of 2016. Still, revenue missed analyst expectations.

Windstream said that during the quarter it increased expenses by about $3 million in response to property damage and restoration of services related to Hurricanes Harvey and Irma. 

"Our overall strategy continues to deliver solid results," President and CEO Tony Thomas said in a news release. "We continue to see growing demand for our SD-WAN service, which represented 19 percent of total enterprise sales in the quarter. Strategic enterprise sales, which include SD-WAN, Unified Communications as a Service and on-net sales, accounted for 36 percent of total enterprise sales in the quarter. We also continue to deliver faster broadband speeds to more consumers and small businesses, which led to improved broadband subscriber trends sequentially."

The results are the first since Windstream ended its quarterly dividend to shareholders as part of a new capital allocation strategy. Also during the quarter, Windstream completed its $227.5 million all-cash acquisition of Broadview Networks Holdings Inc.

Four Segments to Become Two

The company also announced that it is adopting a new business unit structure that includes combining its operations into two units: Cloud & Connectivity and Consumer & SMB. Cloud & Connectivity will be led by Layne Levine; Consumer & SMB will be led by Jeff Small.

Windstream's enterprise, CLEC C/SMB and wholesale segments are now Cloud & Connectivity.

"This change will enable us to accelerate our path to revenue growth, improve the customer experience and simplify our company," Thomas said. "These changes are based on the basic tenet that organizational structure should be nimble and follow the vision and strategy. The anchor of our vision is based on the customer experience — that is not changing."

The company reported the following for the four segments that it plans to consolidate into two segments:

  • Consumer and small business ILEC service revenue — $381 million for the first quarter, down 4 percent from the same time last year.
  • Wholesale service revenue — $173 million, up 11 percent year-over-year.
  • Enterprise service revenue — $554 million, up 12 percent from the same quarter last year.
  • CLEC consumer and small business service revenue — $225 million, up 90 percent year-over-year.

Windstream also said Thursday that 2016 results exclude EarthLink and Broadview operations, while 2017 results include Earthlink operations from Feb. 27 to Sept. 30 and Broadview operations from July 28 to Sept. 30. The company completed its merger with EarthLink Holdings Corp. of Atlanta in February. That all-stock deal was valued at about $1.1 billion.