Windstream said earnings, which missed estimates by 4 cents, included "after-tax merger and integration, restructuring and other expenses" that, if excluded, would have doubled earnings per share to 4 cents. Total revenue came in at $1.5 billion, a 2% decline from the same period last year.
Windstream shares, at around $11.30, are up 41% for the year to date.
Windstream shares got a jolt late last month after the U.S. Internal Revenue Service approved the company's plan to spin off some of its assets into a real estate investment trust. The tax-free spinoff will enable Windstream to realize significant financial flexibility by lowering debt by approximately $3.2 billion and increasing free cash flow to accelerate broadband investments, the company stated in its earnings report.
This is where investors may turn their attention in the near future.
Its REIT plan is essentially a spinoff, which is very good for investors. According to Forbes, since the 2009 market bottom, the S&P 500 has gained 274% while the Guggenheim Spin-Off ETF (CSD) has gained 410%, vastly outperforming.
Windstream's move is another wrinkle in the tax avoidance plans being adopted by U.S. companies.
On Wednesday, Walgreen (WAG) announced it was buying the remaining 55% of European pharmacy chain Alliance Boots but in the process would not move its corporate headquarters in a tax inversion deal. The stock fell on the news.