Time Warner Cable Rises Most Since 2009 on New Buyback Plan
January 27, 2012, 7:46 AM ESTBy Alex Sherman
(Updates with closing shares in second paragraph.)
Jan. 26 (Bloomberg) -- Time Warner Cable Inc., the second- largest U.S. cable-television provider, gained the most since April 2009 after reporting quarterly profit that beat analysts’ estimates and announcing a $4 billion share buyback plan.
The company advanced 7.8 percent to $74.51 at the close in New York after it reported a 44 percent jump in fourth-quarter profit. The share gain was the biggest one-day increase since April 29, 2009.
Time Warner Cable’s strategy to rebrand itself as a broadband provider paid off with a better-than-estimated gain in high-speed data customers, making up for the loss of video subscribers. The buyback was “unexpectedly” large and the timing of a new authorization was surprising, said Marci Ryvicker, an analyst at Wells Fargo & Co. in New York.
“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 chief operating officer Rob Marcus said during the conference call. Internet connects were up in each month in the quarter over the comparable month in 2010, the company said.
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. Chief Strategy Officer Peter Stern said Time Warner Cable was “basically a broadband provider” and provided video service “as a convenience for our customers” around Internet service during a Nov. 17 conference.
“Broadband was a real success story in the fourth quarter,” Marcus said on the call.
Time Warner Cable lost 129,000 video subscribers in the quarter. Overall customer additions in the first few weeks of 2012 have been better than the same period a year ago, Marcus said.
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 analysts’ estimates of $5.53. Programming costs per subscriber will increase 8 to 9 percent in 2012 and operating income will grow in the “high single” digits, Esteves said.
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. An existing $4 billion plan is about 80 percent complete.
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 asherman6@bloomberg.net.
To contact the editor responsible for this story: Ville Heiskanen at vheiskanen@bloomberg.net
