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Windstream Shares Surge on Stock Buyback Promise

5:45 am on February 12, 2008 | Category: Business, Corporate, Telephone

Shares in regional telecom operator, Windstream Corp., jumped more than 5% on Friday, after the company reported solid fourth-quarter financial results and pledged to buy back $400 million of its shares by the end of 2009.

Windstream’s fourth-quarter profits increased four-fold, bolstered by the recent sale of its telephone directory business. Operating profits are estimated at $0.24 per share, which is roughly in line with analysts predictions.

Goldman Sachs analyst, Jason Armstrong, noted that although Windstream’s quarterly revenue was weaker than expected, its capital expenses were also significantly below predictions, preventing an ongoing decline in fixed-line telephone services from impacting the carrier’s profits too heavily. Armstrong remains cautious about Windstream’s business model, however, and gives the company’s stock a â€œNeutralâ€ rating.

“While capex cuts and buybacks will provide a measure of comfort to investors focused on FCF sustainability, nonetheless, the weak financial metrics and guidance indicate greater declines in the RLEC (rural local exchange carrier) business than expected,” the Armstrong wrote in a note to investors.

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