Bus 530 - Managerial Finance - Windstream Holdings

Windstream Holdings

Lisa White

BUSI 530/Managerial Finance

May 15, 2015

Dr. Halstead

Windstream Holdings

The telecommunications industry is rapidly changing and to some extent growing as the global need for faster speeds and more bandwidth are demanded by businesses and general consumers. Small telecommunications companies like Windstream are facing a “consume or be consumed” battle to stay in business. Big companies like Verizon and AT&T are able to gobble up small mom and pop shop telecommunications companies but some small companies are able to do the same and grow rapidly, trying to catch up with their much larger competitors. As a whole the global telecommunications industry is seeing a moderate increase in growth worldwide according to The Insight Research Corporation (The Insight Research Corporation, 2015).

Windstream started as a very small telecommunications spin off of the Alltel Company in Arkansas. They then merged with Valor Communications and became Windstream (Mortiz, 2014). In the years since Windstream was founded, the company has acquired several other legacy market telecommunications to build up to a solid company. However, as Windstream has begun to branch out into areas they had not previously serviced their ability to acquire more companies did not diminish but their ability to service those customers in the same fashion as their legacy territory has fallen off and left Windstream facing losses in the last few quarters (Hodel, 2015). Windstream did beat their first quarter profit mark this year, but still missed the mark with their revenue forecast (Fox Business, 2015).

While they are a force to be reckoned with in their legacy markets for complex business and wholesale services, they are struggling to match their competitors outside of their home markets. However, the first quarter of the New Year seems to indicate that Windstream is turning things around, lessening their debt and increasing their cash flow as a direct result of their REIT spin off of Communications, Sales, & Leasing (Windstream, 2015).

Ultimately, this is a high risk investment. The telecommunications industry is constantly changing and with the constant acquisitions being made my multiple companies in the industry, it is never a sure thing that Windstream will weather the changes. This not an investment for the faint of heart. Someone who understands the long term ups and downs of the market might find this a good option, but for most people looking for a solid investment this is not a good choice.

References

Moritz, G. (2014). SPOTLIGHT: Power list: Technology & telecom. Arkansas Business, 31(30), 30. Retrieved from http://search.proquest.com/docview/1563990564?accountid=12085

Fox Business. (2015 May 7). Windstream Holdings beats 1Q profit expectations, misses revenue forecasts. Retrieved from http://www.foxbusiness.com/markets/2015/05/07/windstream-holdings-beats-1q-profit-expectations-misses-revenue-forecasts/

Hodel, M. (2015 May 7). Windstream's proposed REIT structure isn't a panacea for its diminishing competitive position.. Retrieved from http://analysisreport.morningstar.com/stock/research?t=WIN®ion=USA&culture=en-US&productcode=MLE