Jeff Gardner, chief executive officer of Windstream Holdings Inc., resigned Thursday and was replaced by the president of the company's real estate trust.
Gardner, 54, CEO since the firm was founded in 2006, will remain with Windstream as senior adviser to Tony Thomas, his replacement, until Feb. 1, to "ensure an orderly transition," according to a statement from the company. Gardner also will remain as a board member until Feb. 1.
"I am proud to have led Windstream from its creation in 2006," Gardner said in a statement. "The board and I agree that a change in perspective is needed in order to accelerate the pace of change within the company and to more effectively respond to the rapidly evolving needs of our customers."
The company gave no specific reason for Gardner's resignation.
Gardner's departure was a surprise, said one person familiar with the company who asked that he not be identified.
"It was unexpected," he said.
Windstream's board and Gardner mutually agreed that a change was needed, said David Avery, spokesman for the company.
"The board and Jeff agreed that now was the right time to do it," Avery said.
Thomas, 43, has been with Little Rock-based Windstream since its spinoff from Alltel Corp. He joined Alltel when it acquired 360 Communications in 1998.
Thomas has more than 20 years of experience in the communications industry. He was instrumental in the development of Windstream's real estate investment trust spinoff and has served as president of real estate investment trust operations at Windstream since October, a news release said.
He was chief financial officer for Windstream from August 2009 through September 2014, playing an integral role in completing seven Windstream acquisitions valued at a total of $5.6 billion, the release said.
Windstream has been in a decline for much of this year.
The company posted a profit of $8 million in the third quarter, but that was a 74 percent drop from a $31 million profit in the same period last year. On the day third-quarter earnings were announced in November, the stock dropped 7.8 percent.
It was the third straight quarter Windstream had missed analysts' expectations.
Windstream's stock was up 35 percent through the end of the third quarter, but it has fallen 13 percent since Sept. 30.
Shares of Windstream rose 18 cents, or 2 percent, to close Thursday at $9.38 in trading on the Nasdaq exchange. The shares have traded in a range of $7.18 to $13.30 in the past year.
Gardner's resignation was announced after the market closed.
Barry McCarver, an analyst with Stephens Inc., had not talked with Windstream late Thursday so he declined to comment.
But McCarver said in a research report on Windstream last month that stability for the company may not come until late next year.
"Given our expectations for continued volatility in front of the [real estate investment trust] spinoff, and concerns with growth and margins in the near term, we are downgrading Windstream to [hold from buy]," McCarver said in the report. "Long term, we see opportunities for [Windstream] and [the trust] but want to remain on the sidelines until we see better visibility."
McCarver had projected Windstream shares would reach $15 by the end of next year before downgrading the stock last month. Before Thursday's announcement, McCarver had expected that the company's stock would reach only $11 over the same period.
Windstream's decision in July to spin off its real estate assets into an investment trust was a relatively new concept for telecommunications firms.
Analysts were divided on the effect Windstream's plan would have on the industry, but they said similar telecommunications companies were considering following the Little Rock firm's lead.
"Theoretically, they will be the experts in the industry on how to manage ... these assets," Frank Louhan, an analyst with Raymond James & Associates, said in September. "Why not sell infrastructure to this new spinoff from Windstream rather than replicate it all yourself?"
Windstream has been steadfast in payment of a $1 annual dividend per share, a move that has been a concern for some investors in recent years as the company's profit margin tightened.
When the spinoff is completed, Windstream's dividend will drop to 70 cents a year per share. Windstream will pay only 10 cents of the dividend, and the real estate investment trust will pay 60 cents.
Business on 12/12/2014