Bloomberg News

Time Warner Cable Shares Fall as Forecast Misses Estimates

January 31, 2013

Time Warner Cable Inc. (TWC:US), the second- largest U.S. cable-television operator, fell the most in almost four years after its 2013 earnings forecast missed estimates.

Time Warner Cable fell (TWC:US) 11 percent to $89.34 at the close in New York, where it’s based. That was the biggest one-day drop since March 9, 2009.

Adjusted earnings per share will grow 10 percent to 15 percent this year to a range of $6.33 to $6.61, Time Warner Cable said today. That missed the average estimate of $6.91, or 20 percent growth, of analysts surveyed by Bloomberg.

Profit margins will probably be crimped this year on rising programming costs, such as fees to carry sports channels, and a decline in political advertising, Chief Financial Officer Irene Esteves said in a conference call. Time Warner Cable has struck billion-dollar deals to carry the games of the Los Angeles Lakers and Dodgers, agreements Chief Executive Officer Glenn Britt said would contain long-term rate increases, justifying an “expensive” price tag.

This year’s forecast “appears a bit soft,” Marci Ryvicker, a New York-based analyst at Wells Fargo & Co., said in a note to clients. She has the equivalent of a buy rating on the shares.

Fourth-quarter earnings per share were $1.57, beating the $1.55 average analyst estimate compiled by Bloomberg. Sales rose 9.9 percent from a year earlier to $5.5 billion, in line with the $5.51 billion average analyst estimate.

Internet Gains

Time Warner Cable added 75,000 residential high-speed data subscribers and gained 14,000 business customers for the services, it said today in a statement. Average sales per customer increased as the New York-based cable provider announced a $3.95-a-month fee for renting its wireless modems in the quarter, allowing the company to generate more revenue from the service.

Fourth-quarter net income fell (TWC:US) to $513 million, or $1.68 a share, from $564 million, or $1.75 a share, a year earlier, the company said.

The cable operator lost 129,000 residential video customers (TWC:US). The basic cable subscriber base has declined every quarter since 2009 as customers switch to TV services offered by phone and satellite companies.

Time Warner Cable repurchased 6 million shares in the fourth quarter for $571 million, up from the previous quarter’s $500 million.

Ryvicker said Time Warner Cable’s potential capital return may also be affected if it acquires Cablevision Systems Corp. (CVC:US)’s Optimum West division, which serves about 300,000 customers in states including Montana and Colorado. Time Warner Cable made a first-round bid on the business in December, people familiar with the matter said then.

To contact the reporter on this story: Alex Sherman in New York at asherman6@bloomberg.net.

To contact the editor responsible for this story: Nick Turner at nturner7@bloomberg.net


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Companies Mentioned

  • TWC
    (Time Warner Cable Inc)
    • $145.31 USD
    • 1.27
    • 0.87%
  • CVC
    (Cablevision Systems Corp)
    • $20.12 USD
    • 0.27
    • 1.34%
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