Rural communications provider and Motley Fool Income Investor recommendation Citizens Communications (NYSE:CZN) will be phoning in its second-quarter earnings before the market opens Wednesday. Here's what we can expect.

What analysts say:

  • Buy, sell, or waffle? Of the 16 analysts who follow Citizens, two say buy, while 14 say "hold, please." No analysts recommend selling shares. In our Motley Fool CAPS investor database, 243 players have rated the stock, giving the company a three-star rating.
  • Revenue. On average, analysts look for Citizens to report $586 million in revenue this quarter, up 16% from last year.
  • Earnings. The analysts are expecting EPS of $0.17, on average, in line with results reported a year ago.

What management says:
Citizens' management is upbeat about the early closing of its merger with Commonwealth Telephone and integration activities that are benefiting the company. Also, CEO Maggie Wilderotter cites positive results in moving customers to multiservice packages, as "our focus on the customer drove penetration levels for all voice, data and video product bundles" in the previous quarter. As with national competitors AT&T (NYSE:T) and Verizon (NYSE:VZ), the company's revenue from traditional phone services is declining, but it's making up for it with growth in broadband and digital TV subscriptions.

What management does:
Operating and net margins got a nice little shot in the arm in the first quarter of 2007, but the bulk of the gains came from a few extraordinary items, including a $38.7 million settlement in an access charge dispute. Even without the items, though, the company is doing a good job of helping top-line revenue fall to the bottom line.

Margins

12/05

3/06

6/06

9/06

12/06

3/07

Gross

92.2%

92.2%

90.9%

90.8%

91.5%

91.2%

Operating

29.4%

30.2%

30.1%

31.0%

32.1%

33.0%

Net

10.0%

10.4%

12.3%

16.4%

17.0%

17.4%
All data courtesy of Capital IQ, a division of Standard & Poor's. Data reflects trailing-12-month performance for the quarters ended in the named months.

One Fool says:
Under the leadership of Wilderotter, Citizens has shown a solid track record of customer focus, as evidenced by its success in keeping subscribers and strong cash flow. In fact, Yahoo! (NASDAQ:YHOO) recognized Wilderotter's 25 years of experience at companies such as Microsoft (NYSE:MSFT), AT&T, and McCaw Cellular and recently asked her join the board of directors there.

The customer-centric approach to services is increasingly important when it comes to staving off competition from traditional and non-traditional sources alike -- be it an incumbent telco like Qwest (NYSE:Q) or upstarts like Vonage (NYSE:VG). Citizens combines a tight regional focus with attentiveness to customer needs to produce great results -- something I expect to see more of this quarter.

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Fool contributor Dave Mock is a rural consumer trapped in an urban world. He owns no shares of companies mentioned here. Dave is the author of The Qualcomm Equation. Microsoft is an Inside Value pick and Yahoo! is a Stock Advisor pick. The Fool has a disclosure policy that seeks to serve first, and retire with a bowl of rocky road ice cream later.