If the old adage "you have to spend money to make money" is true, Windstream Corp. is going to put it to the test.
The Little Rock-based telecom and broadband provider posted third quarter earnings of $71.5 million, down 16% from one year ago, when net income topped $85.2 million. Earnings per share fell from $0.18 to $0.14, while quarterly revenue was up 6% to $1.023 billion.
Windstream, which has been on a major acquisition spree in the past 18 months, has been shifting its business model from its traditional wireline service to a range of new services in broadband, fiber optic networking, data hosting, and cellular service infrastructure. That shift led to $178 million in capital expenditures in the third quarter — a 57% increase compared to last year.
“I am very pleased with the improvements in revenue trends we have accomplished this year,” said Jeff Gardner, president and CEO of Windstream. “Our goal over the past few years was to transform our business to achieve revenue and cash flow growth. Given our shifting revenue mix, success-based capital investments and expected deal synergies, we are on the verge of showing growth in both of these areas.”
Recently, shareholders of PAETEC, a New York-based telecom and data provider, approved a $2.3 billion merger with Windstream.
Windstream’s stock (NASDAQ: WIN) opens trading on Friday at $11.64 per share. In the last year, the company’s shares have traded in the range of $10.76 to $14.40.
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