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Windstream to Streamline Costs through Job Retrenchment

Zacks Equity Research

Telecommunication service provider Windstream Holdings Inc. (WIN) announced that it will eliminate 350 job positions across several of its departments by Dec 1, 2014. The layoff will represent around 2.7% of its total workforce.

The company, which presently comprises 13,000 employees, stated that 38 positions would be slashed in Arkansas. Around 120 of the affected workers have agreed on a voluntary buyout.

Windstream has decided to downsize its workforce in a bid to better its cost structure and increase operational efficiency.

Apart from initiatives like workforce reduction, the company continues to invest in long-term growth initiatives such as fiber-to-the-tower (:FTTT) deployment and broadband network capability. Further, enhancement of its long haul network, integration of PAETEC systems, continuous launch of data centers coupled with the recent Kinetic advanced TV service bode well for the company.

Windstream estimates expense related to severance packages and other employee benefit costs at around $7.5 million in the fourth quarter of 2014. However, the company expects the downsizing to result in an annualized savings of about $20 million. Moreover, Windstream plans to extend job transition assistance to the affected employees.

Interestingly, this is Windstream’s second attempt to boost operational efficiency. In Feb 2014, the company had laid off 400 employees across the U.S., including 67 in Arkansas and 36 in Little Rock.

Windstream’s major risks include threats from a competitive market, soft carrier transport business and access lines losses, all of which are affecting its wireline business revenues. The company reported disappointing financial results for the third quarter of 2014, with both the top and the bottom line falling short of the respective Zacks Consensus Estimate.

Windstream currently has a Zacks Rank #4 (Sell).

Stocks that Warrant a Look

RF Micro Devices Inc. (RFMD), Inteliquent, Inc. (IQNT) and Ruckus Wireless, Inc. (RKUS) are some of the better-ranked stocks worth considering in this sector over the near term. While RF Micro Devices and Inteliquent sport a Zacks Rank #1 (Strong Buy), Ruckus Wireless carries a Zacks Rank #2 (Buy).

Read the Full Research Report on WIN
Read the Full Research Report on RFMD
Read the Full Research Report on IQNT
Read the Full Research Report on RKUS


Zacks Investment Research