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Time Warner Cable 1Q Profit Beats Expectations

Apr 30, 2008  •  Post A Comment

Time Warner Cable’s first-quarter earnings, announced today, fell less than analysts expected. The No. 2 U.S. cable television service maintained its subscriber base amid increased competition from satellite and fiber-optic TV providers by bundling its cable, Internet and telephone services. Majority owner Time Warner Inc. said today it would sell its share of the cable company “soon.”
Time Warner Cable’s net income fell 12% to $242 million, or 25 cents a share, from $276 million, or 28 cents, a year earlier, as general and administrative costs and depreciation expenses rose as a percentage of sales, the company said. Analysts in a Thomson Financial survey estimated a profit of 22 cents a share.
Time Warner Cable, which along with Comcast acquired some cable systems from Adelphia Communications in 2006, added basic cable, high-speed Internet and telephone subscribers. It faced the challenges of a high-definition TV service marketing push from satellite leader DirecTV as well as growth from fiber-optic operators such as Verizon’s FiOS and AT&T’s U-verse.
Verizon said this week that its FiOS subscriber base tripled over the past year to about 1.2 million. DirecTV and No. 2 satellite operator Dish Network will report first-quarter earnings later this month.
Time Warner Cable’s first-quarter revenue rose 8% to $4.16 billion, beating the average analyst estimate of $4.14 billion.
“We believe these positive trends support our thesis that the acquired systems are poised for a turnaround in 2008,” Bear Stearns analyst Spencer Wang said in a note to clients today.
Time Warner Cable’s 14.7 million subscribers, located primarily in New York, Texas, California and the Carolinas, were about even with a year earlier. Revenue from Internet subscribers rose 11% while telephone-based sales jumped 39%.
“We’re competing aggressively across all areas of our business, while continuing to invest for sustained growth,” Time Warner Cable CEO Glenn Britt said today in a statement. “We’re very encouraged by the consumer response.”
Time Warner Inc., which spun off Time Warner Cable in a January 2007 initial public offering but still owns about 84% of TWC, said in a statement today that it will “soon” have an agreement to sell its stake in the cable company.
Comcast, which had about 24 million subscribers at the end of last year, will report its first-quarter earnings Thursday.
Time Warner Cable shares, which had fallen 24% in the past year before today, rose about 2%.
Time Warner Cable also said today that 2008 revenue will increase about 9% to about $17.4 billion while earnings will be $1.25 to $1.30 a share. Analysts estimate 2008 earnings at $1.27 a share on sales of $17.25 billion.
Update: Added last paragraph. 2:13 p.m.

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