We are maintaining our Neutral recommendation on
) highlighting a strong operational base that will drive growth
in business and consumer channels with the addition of high-speed
Internet customers and enhanced promotional strategies. However,
competitive threats, a highly leveraged balance sheet, continued
access-line erosion and diminishing wholesale business keep us
from becoming positive on the stock.
Why the Reiteration?
We remain optimistic that Windstream's focus on expanding its
service offerings to businesses with VoIP services, data bundles,
cloud and managed services; data center co-location; fiber
transport as well as increasing distribution channels will return
positive results in the near term. With respect to broadband
expansion, the company is targeting to enhance its coverage and
increase speed in various areas.
Little Rock, Arkansas-based Windstream has adopted a number of
steps to broaden its business horizon. In an attempt to expand
its line-up of data centers, the company will set up a new data
center at the Franklin, Tennessee campus just outside Nashville.
The company will continue to invest in long-term growth
initiatives such as fiber-to-the-tower (FTTT) deployment and
broadband network capability to support incremental revenue.
On the flip side, Windstream faces the major risk of access lines
losses that are negatively affecting its revenue in the wireline
business unit. Regulatory issues coupled with the constant
pressure of technology innovation and next-generation product and
service offerings are the other headwinds.
We witnessed no earnings momentum for the stock over the last 30
days. The Zacks Consensus Estimates for the fourth quarter and
full year 2012 are currently pegged at 13 cents and 49 cents per
share, respectively. This reflects year-over-year decrease of
33.2% and 37.1% for the quarter and full year.
Other Stocks to Consider
A stock, within the wireline rural segment, worth considering is
) and it carries a Zacks Rank #2 (Buy).
CBEYOND INC (CBEY): Free Stock Analysis
WINDSTREAM CORP (WIN): Free Stock Analysis
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