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Charter Shares Continue Dropping On Q3 Warning

Oct 8, 2004  •  Post A Comment

Shares in Charter Communications fell 4 percent in midday trading Friday as Wall Street reacted to a warning Thursday that the cable operator controlled by Paul Allen would miss its full-year cash-flow targets and will report another loss of customers in the third quarter.

Charter shares were trading at $2.55 a share, down 10 cents from Thursday’s close. That decline came after Charter shares fell 5 cents Thursday.

The decline was prompted by a filing with the Securities and Exchange Commission in which the company warned that its cash flow would not surpass 2003 levels, while revenue was expected to grow at a scant 3 percent. The company blamed the weak results on higher customer service and service-related costs.

The company also reported that it is likely to lose between 55,000 and 60,000 analog cable customers in the quarter, but will add around 35,000 digital cable customers and between 105,000 and 110,000 new high-speed data customers.

The company lost a greater-than-expected 66,000 basic cable customers in the second quarter.

The warning has several analysts on Wall Street concerned about Charter’s ability to maintain the little financial flexibility it has. The third quarter is typically a period when most cable operators add customers, and analysts believe Charter’s warning reflects the beating the company is getting from satellite operators.