Windstream Corp.’s (WIN) third-quarter earnings prove the carrier’s decision to pursue business customers through the pending NuVox acquisition could not have come at a better time.
On Monday, Little Rock, Ark.-based Windstream reported wider losses and lower revenue than Wall Street and analysts had expected. Windstream traditionally has focused on residential users but soon will branch out to SMBs thanks to the $643 million NuVox deal. In the meantime, Windstream’s third-quarter profit dropped to $80 million, down from $105.9 million in the year-ago period. Similarly, revenue slid from $794.1 million to $734.3 million. Industry observers had projected revenue of $747 million.
The surprise was that Windstream bled the least amount of landline subscribers than it has since it was formed – thanks to the combination of Alltel’s wireline business with Valor Communications Group – in 2006. CEO Jeff Gardner attributed that stemmed churn of 27,000 accounts to marketing and promotions success. Those efforts also created solid broadband adoption, Gardner said in a prepared statement. To that point, Windstream added about 26,000 new high-speed Internet users in the third quarter for a total broadband base of 1.05 million customers.
“We remain focused on improving the trends in our business and continue to demonstrate that we can sustain our cash flows,” he added.
Indeed, Windstream increased its net cash by 9 percent year-over-year. The number likely was helped by reduced capital expenditures – down 22 percent year-over-year, to $67 million – while customers continued to spend, on average, $79.99 per month. Operating income, however, fell by 17 percent year-over-year to $225 million.
Overall, despite some improvements, Windstream’s results didn’t do enough to please Wall Street. By early afternoon, the rural incumbent’s shares were down almost 3 percent, hovering around the $10 mark.
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