Losses sap Windstream share price

Windstream Holdings Inc.'s shares tumbled more than 8 percent Tuesday after the telecommunications firm reported a loss for both its 2014 fourth quarter and fiscal year.

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Arkansas Democrat-Gazette

Graphs showing Windstream fourth quarter information.

Windstream reported a net loss of $77.5 million, or 13 cents per share, for the quarter and a loss of $39.5 million, or 7 cents per share, for the full year.

The company posted a profit of $118.4 million, or 20 cents per share, in the fourth quarter of 2013 and $241 million, or 14 cents per share, for that year.

"Results fell short of our expectations, and we are taking the necessary action to put us on the path for success," said Tony Thomas, Windstream's president and chief executive officer, during a conference call with analysts Tuesday.

Windstream's quarterly earnings included a pretax expense of $128 million, or 13 cents per share, related to its pension plan.

The company said the charge came from a drop in the discount rate used to measure its pension obligations and changes to mortality assumptions reflecting longer life expectancy.

Windstream's quarterly results also included a 3 cent after-tax merger, integration and restructuring expense.

Shares of Little Rock-based Windstream fell 72 cents, or 8.4 percent, to close Tuesday at $7.86 on the Nasdaq in more than twice the average trading volume.

Windstream's financial results were released before the market opened. The company's stock has traded between $7.65 and $13.30 in the past 52 weeks.

Windstream reported revenue of $1.44 billion for the quarter that ended Dec. 31, compared with $1.49 billion during the same quarter a year ago.

For the year, Windstream posted revenue of $5.8 billion, down from $6 billion in 2013.

"I have been CEO of Windstream for only 10 weeks, and we've already made a number of significant changes to the business to better serve customers and improve profitability," Thomas said during the call.

"These changes combined with plan initiatives will advance our goals of improving the customer experience, operating a best-in-class network and delivering improved financial results and increased value for shareholders," he said.

Windstream said it had free cash flow of $794 million for the year and paid $602 million in dividends to shareholders.

In providing an outlook for fiscal 2015, the company said it plans to improve revenue in its enterprise, consumer and small-business service categories, with total service revenue ranging from flat to a 4 percent drop when compared with 2014.

During the conference call, David Barden, an analyst with Bank of America, asked Thomas about Windstream's revenue expectations for the quarter.

"You kind of stated that the year 2014 on a revenue basis didn't go as well as you expected it to go but for 2015 you are guiding for the possibility that it gets even worse," Barden said.

Thomas responded, saying Windstream gave a broad range for the year's revenue and that the company is "looking at each of the three business units, making sure they are structured for success in 2015. And frankly we just want to give ourselves flexibility around ultimately what is the best way to create value for our shareholders."

Windstream said it also expects to complete the spinoff of some of its telecommunications assets into a real estate investment trust in the second quarter of 2015.

Business on 02/25/2015

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