Wind­stream lops div­i­dend; stock falls

Northwest Arkansas Democrat-Gazette - - BUSINESS & FARM - DAVID SMITH

Wind­stream Hold­ings ended its 11-year-old div­i­dend “ef­fec­tive im­me­di­ately,” the Lit­tle Rock telecom­mu­ni­ca­tions com­pany an­nounced Thurs­day, and im­me­di­ately the stock price col­lapsed.

Wind­stream’s stock fell to an all-time low of $2.37 a share in trad­ing on the Nas­daq ex­change be­fore clos­ing at $2.38, los­ing more than a third of its value from Wed­nes­day’s close of $3.72.

The value of Wind­stream’s stock fell about $255 mil­lion in a day, from about $707 mil­lion on Wed­nes­day to about $452 mil­lion on Thurs­day.

About 19 mil­lion shares were traded, more than six times the av­er­age daily vol­ume of 3.1 mil­lion shares.

“Our [stock] is un­der­val­ued, es­pe­cially given our im­proved strate­gic di­rec­tion with en­hanced prod­uct ca­pa­bil­i­ties and an­tic­i­pated ac­qui­si­tion synergies of $180 mil­lion,” Tony Thomas, Wind­stream’s chief ex­ec­u­tive of­fi­cer, said in a state­ment.

Wind­stream said it ex­pects the re­cent pur­chases of EarthLink, an In­ter­net and net­work prod­ucts and ser­vices busi­ness, and Broad­view, which pro­vides In­ter­net data com­mu­ni­ca­tions ser­vices for small busi­nesses, will strengthen the com­pany.

In ad­di­tion to the end of the div­i­dend, Thomas said Wind­stream will buy back $90 mil­lion of the com­pany’s stock.

At an av­er­age of $3 a share, $90 mil­lion would buy 30 mil­lion shares of Wind­stream, re­duc­ing the out­stand­ing shares from about 190 mil­lion to about 160 mil­lion.

Wind­stream said it lost $68.1 mil­lion in the sec­ond quar­ter com­pared with a $1.5 mil­lion profit in the same pe­riod last year. That equals a loss of 37 cents per share com­pared with earn­ings of 1 cent a share

in the sec­ond quar­ter of 2016.

Wind­stream beat the av­er­age es­ti­mate of a loss of 40 cents a share by seven an­a­lysts sur­veyed by Thom­son Reuters.

But the elim­i­na­tion of the div­i­dend over­shad­owed other news Thurs­day.

“I can’t say that it was un­ex­pected,” said Bob Wil­liams, se­nior vice pres­i­dent and man­ag­ing di­rec­tor of Sim­mons First In­vest­ment Group Inc. in Lit­tle Rock. “If you look at the com­pany’s earn­ings over time, [Wind­stream] was hav­ing dif­fi­culty cov­er­ing the div­i­dend with earn­ings.”

The div­i­dend was what at­tracted in­vestors to the stock tra­di­tion­ally, Wil­liams said.

“So given the to­tal elim­i­na­tion of the div­i­dend, it’s not sur­pris­ing that the shares got hit hard [Thurs­day],” Wil­liams said.

Wind­stream, a spinoff from All­tel Corp., had a$1 a share an­nual div­i­dend when it be­came a pub­lic com­pany in July 2006, said David Av­ery, a Wind­stream spokesman.

In April 2015, Wind­stream com­pleted a spinoff of what is now Uniti Group and had a re­verse stock split. At that point, Wind­stream be­gan pay­ing an an­nual div­i­dend of 60 cents per share, Av­ery said.

The div­i­dend yield at Wed­nes­day’s close of $3.72 a share was 16 per­cent, Av­ery said.

Wind­stream had rev­enue of al­most $1.5 bil­lion in the sec­ond quar­ter, up from $1.4 bil­lion in the sec­ond quar­ter last year.

Newspapers in English

Newspapers from USA

© PressReader. All rights reserved.