With Windstream Corporation (NASDAQ:WIN) falling after its second quarter earnings release, it seems that investors are concentrated on unimportant issues. Total revenue and operating income declined year-on-year, but the company is poised to tackle this challenge. The core business and consumer broadband segments are expanding, and right now, Windstream Corporation (NASDAQ:WIN) is continuing to strike a balance between paying an attractive dividend and reducing its debt over time.
Customers are shifting to cloud technologies, leading many to suppose that Windstream Corporation (NASDAQ:WIN) will suffer the same fate as companies not adapting quickly enough to new realities. However, Windstream has started to compete within the cloud market. But it has not forgotten that it derives much of its revenues from the business and consumer broadband segments that are still growing. In a recent report, IDC is forecasting a 3.4% growth for the telecom services market for 2013.
This makes competitors, such as AT&T Inc. (NYSE:T) and Verizon Communications Inc. (NYSE:VZ)’s , sweep of the cloud market in the telecom services sector not as important. Windstream Corporation (NASDAQ:WIN) opened three data centers in Chicago, Nashville, and Raleigh-Durham. They will provide capacity to meet the strong demand for data center services. However, the company’s core business and consumer broadband business also offers opportunity. Windstream is smart to focus its resources in this sector.
Verizon Communications Inc. (NYSE:VZ) and AT&T Inc. (NYSE:T) have engaged in resources in cloud deployments. While it will give them a boost in revenues, it will take focus away from land-line telecom services, which produces a high amount of cash flow without demanding large capital investment. Windstream is strong in this department, and this has allowed the company’s operating margin to outpace AT&T Inc. (NYSE:T) and Verizon Communications Inc. (NYSE:VZ)’s.
While Windstream’s total revenues declined 2% year-on-year, its strategic revenues, which consists of total business and consumer broadband revenues, grew 3% and represents 71% of the company’s total revenues. A soft business sales environment and continuing pressure in the carrier transport business were among the reasons for the net decline. Within Windstream Corporation (NASDAQ:WIN)’s core business, the business service revenues increased 2% year-on-year, the consumer broadband revenues rose by 6% year-on-year, and the total average revenue per customer increased 7 percent year-over-year.
Windstream Corporation (NASDAQ:WIN) wholesale revenues saw a decline from the last year. The decline was a result of lower intrastate access rates and lower switched access revenues from declining consumer voice lines. However, the next year is expected to be better, with the company expecting to change focus. Windstream plans to sell services to multiple tenants looking to support ongoing demands for higher wireless data speeds. This is where its data centers will prove very important.