Windstream: Q4 09 profit drops, but broadband, TV were up

Windstream's Q4 earnings again illustrate the need for tier 2 operators, once known for nothing more than landline POTS service, to continue to morph into an IP-based entertainment and business service companies.

Although Windstream's Q4 09 profits dropped seven percent--an aspect it attributes to ongoing landline voice loss--overall company revenue surpassed Wall Street's expectations. Windstream's Q4 09 net profit declined from $81 million, or 19 cents a share in Q4 08, to $76 million, or 14 cents per share. However, revenue only dropped three percent to $754 million, going above Wall Street's expectations of $739 million.

On the services side, Windstream again saw a series of gains and losses. In the losses column, Windstream lost about 35,000 access lines--the lowest it has reported in the last five quarters. At the same time, Windstream's broadband subscriber base increased 10 percent with the addition of 27,000 new customers, bringing its total subscriber base to about 1,132,000 million. In addition, Windstream signed up about 10,000 new digital TV customers, bringing its total video base to about 369,000 customers.

While industry watchers are anxious to see when the ILEC will make a move on a bigger property, Windstream has taken the road less traveled on its M&A strategy by acquiring three smaller ILECs (D&E Communications, Lexcom and Iowa Network Communications) and one CLEC (NuVox).

Jeff Gardner, president and CEO says that its acquisition strategy is focused on enhancing its growth prospects at a time when its bread and butter voice business continues to be picked apart by cable competition and wireless substitution.

"We significantly improved the company's strategic and competitive positions through very targeted acquisitions that will help us sustain revenue and cash flow over time," said Gardner in a release. "We also reduced our credit market risk by raising the capital needed to fund our announced acquisitions and extending the vast majority of our bank debt maturities."

For more:
- see the release here
- Reuters has this article

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