Windstream Bounces Back From Rough Quarter, Records a Profit

Has Windstream turned a corner? It depends on how you read the numbers.

The communications giant and channel stalwart on Thursday reported a profit of $5.3 million in the first quarter of 2015. That was down from $16 million the same quarter a year ago, but was a terrific start to the year when you compare it to the fourth quarter of 2014, when the company lost $77.5 million, putting it in the red for the year. Those dismal numbers prompted new CEO Tony Thomas to declare in February that “we are taking the necessary actions to put us on the path for success.”

Analysts had been predicting Windstream to lose more money in the first quarter, but it didn’t happen. Revenue fell 3 percent, to $1.4 billion, which slightly missed Wall Street’s expectations.

Breaking it down, enterprise and small-business revenue declined slightly – 1 percent – to $741 million. Data and integrated services revenue was a bright spot, up 3 percent, to $427 million, compared to the first quarter of 2014. That was led by the demand for IP-based services and next-generation data.

On the consumer side, broadband service revenue was $123 million, up 2 percent from the same period a year ago. Overall consumer service revenue was $312 million, essentially unchanged.

Carrier service revenue in the first quarter was $177 million, down 7 percent, primarily due to the continuing migration from legacy TDM circuits to newer Ethernet technology.

Windstream completed its tax-free spinoff of certain telco assets into a real-estate investment trust last month, so this is the last quarter in which the company will report those numbers as part of its earnings.

“2015 has already seen significant progress, highlighted by the successful completion of the spinoff of Communications, Sales and Leasing (CS&L) on April 24,” said Tony Thomas, president and chief executive officer. “This transaction has made Windstream a stronger company with less debt and increased capacity to invest in our network and create value for our shareholders.”

It could be several quarters before it can be determined whether the spinoff is successful, but many industry insiders believe it will be. Windstream paid down $2.4 billion in debt in conjunction with the spinoff and will repay an additional $850 million with the cash proceeds received from the transaction.

Follow senior online managing editor Craig Galbraith on Twitter.

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