by Theo Alexander

Created on: December 08, 2011   Last Updated: December 20, 2011

Investing In Windstream

Windstream Corp - bringing customers the very best in speedy and effective network communications. As a leading provider of advanced communications, including the distribution of cloud computing and managed services to businesses all over the world, Windstream (WIN) has established itself as a reliable and high-quality corporation. While displaying outstanding commitment to customer service and innovation in network communications, the company offers internet services, broadband, phone and television services to a broad range of consumers. The company's headquarters is situated in Little Rock, Ark.

As an S&P 500 provider with operations in 29 states and a long-haul fiber network spanning over 60,000 route miles, company growth an expansion is vast and looks like it might continue. Windstream is also branching out in other areas, such as an impressive range of IP-based data services. (Windstream Corporate Profile)

Financially, the company has generally had quite a bumpy year. In the third-quarter of 2011, under GAAP, revenues reached $1.023 billion, which shows a promising 6% increase in comparison to the same time the previous year. Unfortunately, while operating income for the same quarter decreased by 1% at a total of $267 million, net income fell 16%, reaching $72 million (a 14 cent drop of diluted earnings per share). Despite these decreases, free cash flow reached $211 million, a massive increase of 72%.

However, under Pro Forma, results differ slightly. Pro Forma influences GAAP results by taking the acquisitions of NuVox Inc into account, as well as those of Iowa Telecommunications Services, Inc., Hosted Solutions Acquisition, LLC and Q-Comm Corporation, while excluding merger and integration costs linked to transactions.

The third quarter also saw Windstream add approximately 9,300 new internet customers, bringing their consumer base up to about 1.35 million - an increase of 4% year-over-year. The company's video customer base grew to 449,000 - also an increase of 4%, while access line declined by around 37,000 during the same quarter. (Windstream Conference Call)

While company success is overall quite optimistic, Windstream faces a number of potential dangers which might cause results to change. Potential investors should take certain factors into account, such as adverse changes in economic conditions in the network communications market, the impact of new technologies in the market, the emergence and timing of company competitors, reform proposals that result in the loss of revenue, federal and state legislation, work stoppage and the failure of equipment among others.

As an internet and phone services company, Windstream deals in a market with a number of threatening competitors, including major mobile and cable companies such as Verizon (VZ) and Time Warner Inc (TWX), as well as industry giants like Alltel (AT) and AT&T (T). Promisingly, Windstream has found a profitable niche in its market by dealing high quality broadband services to mainly rural areas, distancing it from its main competitors.

Windstream may not look like the safest play in telecom communications at the moment, but with its high dividend payout ratio, and influx of free cash flow, the company's cash picture looks a little better than it does at first glance, and investors may want to take a closer look at its potential, before dismissing the idea of investment. (Windstream Financial Reports)

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