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Windstream Holdings, Inc. Message Board

  • renaissancebubba renaissancebubba May 10, 2012 1:30 PM Flag

    I just wanna know....

    ...don't they have to actually have earnings someday? How long can you go on free cash flow paying a giant divvy without making a profit?
    I have been following WIN since early 2009 and all I see is more leverage, eroding fundamentals, and no profits, and all anyone wants to know is is there still free cash flow to support the divvy and is the divvy safe? I have to wonder is Bernie M's investors weren't getting the same kind of story. I am not a basher, I am just trying to understand this stock. I sold some time back at slightly over 13 which seems to have been a good decision, but every time ex div date rolls around I have to resist the urge to get back in.

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    • You're in good company, insiders just bought 60,000 shares. They must feel it's a bargain.

    • let me add though, although I'm more contrite today and won't insult your general intelligence the post you made was not good:

      "without making a profit" - they increased their profit 120% YOY (acquisition based but so what that is a strategy of a lot of growth companies
      "eroding fundamentals" what are their fundamentals? If you think it is land line service to rural area's then you are correct. I think they are a company with a cash cow (land lines) trying to roll up data centers, broadband and biz services by investing cash cow money into assets that are undervalued due to current economic conditions
      "no profits" again, lots of profits and growing very fast (remember don't just read the proforma statements

    • ok then, ignorance is bliss, oh and constance you are even more risky shorting and all even though you can't read a financial statement. I figured neither of you would respond directly to my comments as you most likely didn't understand them

      Again this is how the market can be wrong, just like it was in 2008 when it was flying high

      • 1 Reply to johns.patrick
      • Johnwhatever...

        I'm not shorting WIN. I haven't owned WIN since I sold at 13-something. I bought it in 09 just under 7, which I don't attribute to any great skill of mine, because obviously I'm not as smart as a guy like you who buys long on the way down instead of on the way up. I merely posted something that was food for thought, for those who are capable of thinking. I guess you're one of those people who commits to a course of action and then feels like they have to trash anyone who happens to have a different point of view. Sounds like you aren't terribly secure in your decision to me. Tell you what, hotshot...since you have seen fit to trash my skills, credentials, and level of knowledge, all of which you don't know a single thing about we meet back here at the end of the year and let' see how smart you look then?

    • this pile of dung started smelling bad after they acquired Iowa Telecom. They were losing landline customers right and left. This house of cards is collapsing before your eyes.

    • thanks renaissnce and constance. I have to admit I was questioning my purchases today of this stock until I read this. I mean why would i think the market could be this wrong, I heard exactly what I wanted to hear, that the company fully plans to increase cash flows to the shareholders, probably next year around this time but for sure by mid year. i didn't like the lost wholesale revenues but I would assume anyone watching this stock already knew the subsidies and wholesale revenues are at risk (that is the entire strategy of mgt, get away from those parts of the biz)

      But then I see your comments and I am comforted, it is amazing how many people out there make there own investments when they have no business doing so as they are too lazy to understand their investments, anyone that has watched this company for a while had to be buying today as they did what you wanted them to do, affirm the dividend is safe, verbally and via the numbers.

      renaissance/constance it isn't that simple, you can't just say PE ratios or profit vs dividend. this is a company that has to make huge investments that really don't depreciate, yet they have to depreciate them so they will always look to be paying more than they can - look at rails, utilities and other similar industries and you'll understand better (maybe). Comments like they can make dividends because they have subsidies are really funny - look in the statements subsidies are miniscule to this company and even if they weren't who cares, you making a political statement or trying to make money. By the way the wholesale hit has nothing to do with subsidies - these transaction are between two private companies. posting the court information like it is a seperate issue not the exact issue that was discussed at length on the call shows a real lack of integrity or intelligence. and constance, you are the funniest of all, I think you are a numbskull, I'm not calling you a name I actually think your skull is numb due to inactivity inside of it. Go look at their GAAP financials, revenues are up 51% YOY and profit is up 120% YOY. You are quoting proforma financials (financials restated to make it look like they owned paetec all along)

      Thanks guys, you made me much more comfortable with the purchases i made today

      I advise you to put your money in an annuity and stop pretending like you can invest, this isn't a complicated story

      • 4 Replies to johns.patrick
      • Yes all capital assets other land have to be depreciated per GAAP, FASB and IASB Accounting rules. The only thing that changes is the number of years (for different asset claases) they are depreciated over per 'Treasury Department Regulations that are then authored in 'Internal Revenue Code'.

      • well, pal, if you like long shots and you're willing to risk 30% of your principal to get a couple of quarters of 10% dividends, you've come to the right place. Please continue to dazzle me with your investment wisdom.

      • I do agree that there are too many people investing in companies that they do not understand. But, the market IS always right. Institutional money spoke today on WIN, and it says it doesn't like what it sees. This chart looks like death, and although it might be a long trade on a bounce....I will just stay away. I have been watching it for an entry (divi looks enticing)...but I think it has a lot of work to do. Maybe the $9.50 level holds as support, but if could fall all the way to $6-$7 range.

        This is a much better short than long...wait until it gets close to $11...then short it with a buy stop at around $11.30ish. Probably best to just stay away.

      • mmichael and johns,
        Let Constance guide your way. WIN's dividend will soon cause a cash flow issue I can assure you. WIN has a Franklin Delano Roosevelt mindset in a 21st Century telecom world. Government propped up behemoths like WIN struggle when competition throws a monkey wrench in the works. Even Farmer Jones in Bugtussle, Windstreamland would prefer D-TV and to pull his bandwidth off an ATT and VZW tower than to stoop to use WIN's rickety DSL run out 15 miles over hill and dale to his compost pile. Go ahead and go long on WIN, boys. As the black hole of backward looking ILECs sucks WIN in right behind FTR, I will be shorting this pos like nobody's business. By the way, this is a message board not a prospectus but those who invest in WIN might be wise to pay heed.

    • Cash flow is what matters for paying a dividend. Earnings don't really matter. Earnings is an accounting construct, and can be offset by non-cash items like depreciation.

      An analogy would be if you said that your take-home "earnings" last year were reduced by $2000 to depreciate the cost of your $20k car over 10 years because you must replace your car every 10 years in order to get to work and back. That statement would be true in an accounting sense, but the fact is that the $2000 was deposited in your bank account and was available to pay your kids their allowance, etc.

      • 3 Replies to strum_this
      • I'm just wondering after using your example what is left to buy the new car that you will need? Just like the poster said you have to have earnings to stay in business.

      • Yeah, when my car is worn out and I need to buy a new one that costs even more to get to work, then I punt? It's not just an accounting construct. Things wear out. that's why we depreciate them. In theory we are making a replacement allowance, but if you spend that then when you need it, it's not there. Are you tellimg me this is what WIN is doing?

      • A dividend is an allocation of an after tax profit to shareholders. Profit is an outgrowth of positive earnings. If the company has negative EBITDA, how fast do you think cash flow is going to dry up?

        While I agree, free cash flow allows a lot of flexibility in running a business or a household, if you don't have positive earnings the only other way to increase cash is to sell more stock or borrow from the bank and no freaking company is dumb enough to dole that cash out as a dividend . . . except maybe companies whose shareholders only own the stock because it pays 8% a year.

    • Nah, no earnings necessary. See, for years, all companies like WIN and FTR had to do was take government subsidies, polish them up a bit and then dole them back out to shareholders as dividends. Now WIN actually has to compete in the world. So, when somebody is faced with a crappy DSL line or high speed wireless or cable access, the choice is obvious. WIN's only salvation is wholesale and they were destroyed this quarter in that sector.

      Here's some more bad news on the horizon. Looks like one of their recent acquisitions was litigating and it doesn't look good. Who knows how much the liability is.

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