Jim (cont'd):     

Windstream Corporation (WIN)'s annual dividend payout is supposed to be one dollar per share... and next year, it's only supposed to earn $1.02... it will have the earnings to cover the dividend, but just barely... You know our rule of thumb...

For a dividend to be truly safe, the earnings should be at least twice the payout...

Given what WIN is expected to earn, I have to worry about this stock's dividend... but I still think that WIN could be able to pay that dividend for at least the next couple of years. That's because it's got free cash flow, 54% greater than net income... at least so far in 2008... so we can expect the company to have the cash to support its dividend.

The company cut 2.3% of its workforce this week to cut costs. But that represents just $10 million in cost savings, and the annual cost of that dividend is $440 million.

WIN has $111 million in cash on the balance sheet against $5.4 billion of debt. That's a 1000% debt to equity ratio... enormous... but, since WIN has no maturities coming due until 2013... meaning that they do not have to pay off any bonds until then... that doesn't represent a near-term threat to the dividend...

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Don't get me wrong... I would rather own Cramer fave Verizon (VZ)... but WIN does yield twice as much... It's just that the yield is much less safe... and there are still some reasons to be concerned...

Mainly, WIN could take a big hit on intercarrier compensation reform... which is designed to lower the rates that carriers like WIN get... for calls terminating in their areas... And on universal service fund subsidy reform, which would cut the subsidies rural carriers like WIN get for providing universal service and their areas.

(There is an) upcoming FCC vote on December 18 and, if these efforts pass, they could reduce WIN's free cash flow by 26%... Now, that would represent a true threat to the dividend...

So, should I put my neck on the chopping block for WIN's dividend, particularly after I blew it, by recommending the stock at $13?...

I need help on this one... so let's hear from Jeff Gardner, WIN's CEO, and see what he has to say...

Mr. Gardner, welcome back to Mad Money...

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The Bottom Line!:     What do I think?... I think that he made a good case that he won't cut the dividend... I think we've got a situation here where, if you want to gamble a little, versus Verizon (VZ), to pick up the yield... this would be the one. I can only give it one thumb up though because, remember, I recommended it at $13... and it's all the way down to around nine dollars. I think that my credibility on Windstream Corporation (WIN) may be in question... but you be the judge of what Mr. Gardner said.

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