Technology

Windstream Holdings, Inc. (NASDAQ:WIN) Implodes On Dividend Cancellation

Windstream Holdings, Inc. (NASDAQ:WIN)

Shares of Windstream Holdings, Inc. (NASDAQ:WIN) felt shareholder’s wrath after the company announced plans to eliminate its quarterly dividend. The stock plummeted 36.02% to end Thursday’s trading session at $2.38 a share. The sell-off also came on the hells of the company reporting disappointing second quarter results where earnings fell short of analysts’ expectations.

Windstream Holdings, Inc. (NASDAQ:WIN)
One month daily candlebar chart for WIN

Dividend Cancellation

Windstream Holdings, Inc. (NASDAQ:WIN) bills itself as a leading provider of advanced network and technology solutions for consumers and enterprises. The company offers a wide range of bundled services including broadband, security solutions, as well as voice and digital TV. It also offers cloud solutions and unified communications services.

Thursday’s sell-off sent Windstream Holdings, Inc. (NASDAQ:WIN) shares to all-time lows as it registered a new 52- week low of $2.37 a share. The stock has underperformed the overall market ever since it traded at highs of $8.50 a share at the start of the year.

A move to cancel a double digit percentage dividend has not gone well with investors as it was one of the stock’s attractive features. The stock continues to hit lower lows even after company announcing plans to return value to shareholders through a $90 million stock buyback program.

Q2 Earnings

A net loss of $68 million compared to a profit of $1.5 million reported a year earlier also continues to fuel a bearish tone on the stock. The broadband and communication company reported revenues of $1.49 billion – below Wall Street expectations of $1.5 billion.

Chief executive officer, Tony Thomas, has sought to dispel investors’ concerns by reiterating they had a solid second quarter as revenues grew year-over-year. The executive also remains confident about the company’s prospects in the cloud business.

“Additionally, we continue to improve our cost structure and have significant opportunities to further drive down costs through reductions in network interconnection costs, upcoming synergies from the EarthLink and Broadview transactions and initiatives to advance our organizational effectiveness,” said Mr. Thomas.

For The current quarter, Windstream Holdings, Inc. (NASDAQ:WIN) expects service revenue of between $2.02 billion and $2.04 billion helped by the Broadview Networks acquisition. Capital expenditures, on the other hand, should range between $790 million and $840 million.

I have no positions in any of the stocks mentioned, and have no plans to initiate any positions within the next 72 hours. All information, including any data, is provided without any guarantees of accuracy.

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About the author: Steve Clark is a 23-year Wall St professional with stints in M&A, risk management, and algorithm trading. Steve keeps his head in the game by looking for, and writing about, small companies that often get overlooked by the big investment firms.

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Steve Clark is a 23-year Wall St professional with stints in M&A, risk management, and algorithm trading. Steve keeps his head in the game by looking for, and writing about, small companies that often get overlooked by the big investment firms.

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