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Windstream posts lower 1Q results, shares fall

LITTLE ROCK, Ark. (AP) -- Windstream Corp.'s shares sank Thursday after the broadband and communications company reported a 13 percent drop in its first-quarter net income and revenue slightly below Wall Street expectations.

The Little Rock, Ark.-based company reported net income of $52.3 million, or 9 cents per share, for the quarter that ended March 31. That's down from $60.4 million, or 10 cents per share, in the same quarter last year.

Windstream's total revenue fell 2 percent to $1.5 billion from $1.54 billion. That included a 13 percent drop in product sales and 2 percent drop in service revenue.

Analysts were anticipating earnings of 11 cents per share on revenue of $1.53 billion for the period, according to FactSet.

Windstream President and CEO Jeff Gardner said that management is repositioning the company and that he believes that its strategy and investments will allow the company to grow in the long run.

Nomura analyst Mike McCormack said that the company's results support his view that the company has long-term issues, including a misaligned growth and high-dividend business strategy. The analyst said that the company's first-quarter missed both his and the market's expectations on nearly every metric. Its wholesale and business revenue fell short and while its consumer revenue was in line, increasing competition poses a threat.

McCormack said that with economic conditions likely still pressuring Windstream's growth and cable competition eroding its consumer business, he remains unconvinced of the sustainability of the company's dividend stance and revenue growth prospects.

Shares of Windstream fell 37 cents, or 4.3 percent, to $8.15 in afternoon trading after falling as low as $7.89 earlier in the session, near the bottom of its 52-week trading range of $7.86 to $11.05.