Source: Windstream.

Windstream Holdings (OTC:WINMQ) reported second-quarter results on Thursday morning. The regional telecom and business-focused data services specialist saw sales fall 2% year over year, landing at $1.47 billion. Windstream grew its list of enterprise customers by 3%, while all other divisions reported annual subscriber shrinkage.

GAAP earnings came in at $0.02 per share, down from $0.06 per share in the year-ago period. Adjusted OIBDA earnings, which is a non-GAAP metric that's closer to an operating cash flow measure than to tax-accounting GAAP income, fell 7%, to $543 million.

Source: Windstream.

Both sales and earnings fell short of Wall Street estimates, as analysts were looking for earnings of $0.06 per share on $1.48 billion in pro forma sales.

In a prepared statement, CEO Jeff Gardner underscored Windstream's focus on business services. "We have expanded our business marketing programs to strengthen sales and are seeing continued solid sales momentum and positive trends supporting our efforts to move up-market," he said.

In the shrinking consumer channel, Windstream is doubling down on marketing and sales efforts, including a number of new discount plans to drive higher subscription volumes.

All told, Gardner called the quarter "solid and largely in-line with our expectations," holding Windstream's full-year revenue and cash flow guidance firm despite the slight misses against Wall Street estimates.

What's next?
These results will soon be tough to use in year-over-year comparisons. At the end of July, Windstream announced plans to split its operations into two separate businesses.

In a spin-off deal that's expected to close in the first quarter of 2015, Windstream aims to set most of its network assets apart in a publicly traded real estate investment trust, or REIT. The service company will lease network infrastructure from the asset entity. The IRS has already approved this move, but Windstream still has a number of regulatory hurdles to clear before making the change.

For Windstream, it's a tax-effective move that would reduce the core company's $8.5 billion debt load by about $3.2 billion, and yield more than $100 million in annual tax savings. To put these savings into context, Windstream's annual income taxes have hovered around $100 million since 2011.

Shareholders will gain the ability to invest in Windstream's service operations or its asset-heavy network business. Both entities are expected to continue paying dividends, but at very different rates. To qualify as a REIT, the networking operation must pay at least 90% of its taxable income in the form of dividends. It should come as no surprise to see Windstream planning an annual dividend payout of $0.10 per share for the service section, and a far heftier $0.60 per share in the networking segment.

So, the Windstream stock you own today is likely to look very different a year from now. Some investors will choose the service track, hoping for a turnaround based on business-class products. If that pays off faster than the landline phone service withers and dies, this option could pay off handsomely.

But that's a high-risk bet. Most investors will simply buckle up for negligible growth, low volatility, and handsome dividend yields in the network assets portion of today's Windstream.