Little Rock's Windstream posts $232M loss in 1st quarter; stock falls 2.8%

Graphs showing Windstream first quarter quarter information.
Graphs showing Windstream first quarter quarter information.

Windstream Holdings Inc. shares dropped 2.8 percent Thursday after the company reported a $232 million loss for its 2016 first quarter.

Windstream said the loss was partly because of the decrease in value of its stake in Communications Sales & Leasing Inc. The Little Rock company had a profit of $5.3 million during the same quarter in 2015.

"Windstream's vision is to provide a best-in-class customer experience through our network and our people," said Chief Executive Officer Tony Thomas during the company's conference call Thursday.

"This is centered on providing advanced reliable services to our customers while making smart targeted investments to increase the value of our extensive network and generate higher returns for shareholders," he said. "Through our focused operational strategy, we have multiple paths to driving improving financial results."

Windstream had a loss of $2.52 per share for the period, compared with a profit of 5 cents per share in the same quarter a year ago. Analysts expected the company to post a loss of 62 cents per share for the quarter.

The telecommunications company's stock fell 26 cents to close at $9.05 on the Nasdaq. During the first quarter, Windstream completed its $75 million share-repurchasing plan.

Windstream said its financial results included a write-down of $182 million, which reflects a drop in the value of its holdings of Communications Sales & Leasing, also known as CS&L.

The drop in the holdings comes from a drop in the value of CS&L stock.

Windstream holds a 20 percent stake in CS&L, which was spun off into an independent, publicly traded company in April 2015.

Bob Williams, senior vice president and managing director of Simmons First Investment Group Inc. in Little Rock said the bulk of Windstream's first-quarter loss came from drop in value of the company's stake in CS&L.

"They actually did really reasonably well this year -- when you take out the write-down for CS&L," he said.

The company said the value of CS&L stock has increased since the end of the first quarter, and the company's stake was valued at $686 million as of Wednesday. Windstream plans to use the stake in the future to further reduce debt.

Windstream said it had revenue of $1.37 billion for the period March 31, down from $1.42 billion during the 2015 first quarter.

Windstream expects to spend between $800 million and $850 million during 2016.

That excludes the $200 million the company plans to spend to complete a project to upgrade its broadband services by the end of the year.

The funds for the broadband project come from the sale of Windstream's data center, which the company announced in October.

"From a capital allocation standpoint, we continue to advance our broadband capabilities, which yield attractive high margin growth opportunities," Thomas said during the conference call.

A Section on 05/06/2016

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