Windstream (Nasdaq: WIN) on Thursday reported that costs related to the completion of its PAETEC acquisition drove down second-quarter 2012 net income, while revenue rose.
For the quarter, net income declined 44 percent, to $54 million, or 9 cents per share, down 44 percent, from the $97 million, or 19 cents per share, from Q2 2011.
However, on a sequential basis, revenues and sales rose 50 percent, to $1.5 billion, up from $64.6 million in Q1 2012.
The majority of Windstream's expenses in the quarter to the completion of its PAETEC acquisition in December.
Since then, the service provider has been on a cost cutting drive, eliminating what it says are redundancies. In May, the telco announced it would cut 375-400 management positions, which translates into almost 3 percent of its total 14,500 workforce, by the end of Q3 2012.
The telco said that these measures will enable it to realize $30 million to $40 million in annual savings.
Windstream CEO Jeff Gardner said effects of the reorganization will be seen in Q4 2012.
"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," he said in an earnings release
Here's a breakdown of the service provider's key metrics:
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Business Services: Similar to Q1, business-services revenues continued to be a star performer in its portfolio, rising 2 percent year-over-year, to $893 million. Driven by growth in IP, next generation data and data center services, data and integrated services revenues increased 8 percent, to $377 million.
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Consumer Services: In the consumer segment, broadband continued to be the star with $114 million in revenue, up 4 percent from the same period in 2011 on a pro-forma basis. Overall consumer service revenues of $336 million remained unchanged from Q1 2012 but down 3 percent from Q2 2011.
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Wholesale Services: Wholesale revenues declined 12 percent, to $214 million. The company attributed the decline to a decision in the first quarter to suspend and modify certain wholesale products. One area inside wholesale that did see growth was Fiber to the Tower (FTTT) service where it reported revenues $164 million, up 5 percent year-over-year on a pro-forma basis.
Shares of Windstream were trading at $9.24, down $0.06, or 0.68 percent, in Friday morning trading on the Nasdaq.
For more:
- see the earnings release
- The Wall Street Journal has this article (sub. req.)
Special Report: Wireline in the second quarter of 2012
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