LITTLE ROCK — Shares of Little Rock-based Windstream rose slightly Tuesday after the company reported a fourth quarter profit of $10.1 million and said it would pay its $1 dividend.
But investors remain wary of the communications company’s ability to make the dividend payment, said Barry McCarver, an analyst with Stephens Inc. in Little Rock.
Windstream shares rose 1 cent to close Tuesday at $8.94 on the Nasdaq stock market in heavy trading. The company released its earnings report before the market opened.
Windstream shares fell almost 9 percent last week amid concerns it might follow in the footsteps of CenturyLink and lower its dividend.
“The perception was that if they are cutting the dividend, why won’t Windstream?” McCarver said.
CenturyLink, another communications company, announced on Feb. 13 it would lower its quarterly dividend by 25.5 percent. The dividend rate will change from about 73 cents to 54 cents in March.
Windstream shares closed at $9.09 on Feb. 14, a day after the CenutryLink announcement, after open-ing that day at $9.81.
The share price continued to fall until about 10:30 a.m. Tuesday when prices started to rebound.
“I think people are basically digesting the numbers and are still pretty uncertain,” McCarver said, about the company’s limited recovery.
He said he thinks investors will “warm up” to the dividend payout later this year.
There was concern Windstream would lower its dividend in November when the company announced its thirdquarter financial results.
Shares of Windstream dipped to a three-year lowafter the company recorded a 31.2 percent drop in thirdquarter profit.
“Windstream continues to produce substantial free cash flow that enables us to invest in our business and reduce our debt while continuing to pay our $1 dividend,” Jeff Gardner, president and chief executive officer of Windstream, said in a prepared statement. “Our management team and the board of directors unanimously support continuing the dividend at its current rate because we believe it is the best way to create value for our shareholders.”
Windstream reported it had paid $588 million in dividends to shareholders for the year, amounting to a 77 percent dividend payout ratio. The company said it had $148.9 million accrued dividends as of Dec. 31, 2012.
McCarver said Windstream’s fourth quarter results were “very solid.”
“Revenues came a little bit under expectations,” he said.
Windstream reported $1.54 billion in revenue in the quarter. The company’s fourth quarter-profit reverses a $34.7 million loss recorded for its fourth quarter in 2011.
Windstream’s $10.1 million quarterly profit equaled earnings that paid 2 cents per-share less than analysts’ predictions of 11 cents per share.
For the year, Windstream posted a profit of $168 million, or 28 cents per share, with a total revenue of $6.16 billion. In 2011, Windstream reported a profit of $169.5 million, or 32 cents per share, and revenue of $4.28 billion.
Business, Pages 26 on 02/20/2013