Bloomberg News

Time Warner Cable Rises Most in 21 Months, Tops Profit Estimates

January 26, 2012

Jan. 26 (Bloomberg) -- Time Warner Cable Inc., the second- largest U.S. cable-television provider, gained the most in 21 months after reporting fourth-quarter profit that beat analysts’ estimates and saying it would repurchase $4 billion in shares.

The company advanced 7.1 percent to $74 at 10:19 a.m. in New York trading, after it reported a 44 percent jump in profit for the period. Earlier the stock climbed 8.4 percent, for the highest intraday increase since April 29, 2010.

Time Warner Cable, rebranding itself as a broadband provider to attract Internet users and make up for the loss of video customers, announced an unexpectedly large buyback, Marci Ryvicker, an analyst at Wells Fargo & Co. in New York, said. An existing $4 billion plan is about 80 percent complete.

“The $4 billion reload certainly gives comfort that Time Warner Cable is continuing on an aggressive capital return pace,” said James Ratcliffe, an analyst at Barclays Capital in New York.

Net income rose to $564 million from $392 million a year earlier, the New York-based company said today in a statement. Excluding one-time items, earnings per share climbed to $1.39 from 99 cents, exceeding the $1.20 average of analysts’ estimates compiled by Bloomberg.

Embracing Broadband

Fourth-quarter high-speed data customers increased by 130,000, compared with the 96,000 average estimate of 10 analysts surveyed by Bloomberg. Time Warner Cable is setting itself up as a broadband company, rather than a cable-TV business, to attract Internet users and make up for losses of video subscribers.

“At this point for Time Warner Cable, broadband is the main story, and video is secondary,” said Paul Sweeney, an analyst at Bloomberg Industries.

Customer additions in the first few weeks of 2012 have been better than the same period a year earlier, Time Warner Cable Rob Marcus said during the conference call.

Fourth quarter sales rose 4 percent to $4.99 billion, compared with the average estimate of $4.97 billion.

Time Warner Cable Chief Financial Officer Irene Esteves said the company’s 2012 earnings per share would be between $5.25 and $5.50, below analyst estimates of $5.53. Programming costs per subscriber will increase 8 to 9 percent in 2012.

Time Warner Cable boosted its quarterly dividend 17 percent to 56 cents per share. Ratcliffe estimates Time Warner Cable will buy back $2 billion of the authorized $4 billion in 2012. The company declined to forecast the pacing of buybacks for this year.

Comcast Corp., the largest U.S. cable operator, is scheduled to release fourth-quarter earnings on Feb. 15.

--Editors: Niamh Ring, James Callan

To contact the reporter on this story: Alex Sherman in New York at

To contact the editor responsible for this story: Ville Heiskanen at

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