Bloomberg News

Shaw Falls After Cutting Forecast for Unit: Toronto Mover

April 13, 2012

Shaw Communications Inc. (SJR/B), a Canadian cable television operator, fell the most in more than five months after cutting its full-year profit forecast at its main business.

Higher spending on marketing and new customer service centers have put “short-term pressure” on results, the Calgary-based company said in a statement as it reported quarterly results. Shaw now expects a “marginal decline” in cable operating income whereas previously it had expected “continued growth,” the company said.

Shaw is ploughing more money into promotions and other ways to keep customers as it tries to fend off the challenge from Telus Corp. (T), with whom it’s battling for control of the cable market in Western Canada.

“Shaw’s strategy to protect its customer base after steep TV subscriber losses to Telus is showing signs that it is working,” said Desjardins Securities Inc. analyst Maher Yaghi in a note today. “However this new strategy comes with increased pressure” on free cash flow and profitability, said Yaghi, who is based in Montreal and rates Telus a hold.

Shaw also cut its forecast for free cash flow this year to C$450 million ($451 million) from C$550 million. The company said sales last quarter climbed 2.9 percent to C$1.23 billion from a year earlier, missing the average estimate of C$1.24 billion in a Bloomberg survey of analysts.

Cogeco Cable Inc. (CCA), a Montreal-based competitor, fell again today after yesterday reporting sales that missed analysts’ estimates. Revenue climbed to $318 million, below the $339 million expected.

Shaw fell 5.2 percent to C$19.69 in Toronto, the most since Oct. 22. Cogeco dropped 3.9 percent to C$48.62, its lowest level since Feb. 28.

To contact the reporter on this story: Hugo Miller in Toronto at hugomiller@bloomberg.net

To contact the editor responsible for this story: Peter Elstrom at pelstrom@bloomberg.net


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