Time Warner Cable Profit Exceeds Estimates on Customer Gains
Stock Chart for Time Warner Cable Inc (TWC)
Time Warner Cable Inc. (TWC), the second- largest U.S. cable-television provider, reported profit that beat analysts’ estimates after adding new subscribers.
First-quarter net income rose to $325 million, or 93 cents a share, from $214 million, or 60 cents, a year earlier, the New York-based company said today in a statement. Excluding one-time costs, earnings per share were $1.01, topping the 99-cent estimate of analysts surveyed by Bloomberg.
The company added 189,000 new broadband and 84,000 new digital phone subscribers and lost 65,000 video subscribers. The gains in broadband were higher than an estimate of 150,000 from James Ratcliffe, an analyst at Barclays Capital Inc. in New York, an indication that customers are recognizing the quality of cable Internet, he said. Time Warner Cable competes against AT&T Inc.’s U-verse and Verizon Communications Inc.’s FiOS for broadband and video users.
“In areas where there are U-Verse and FiOS, cable has a better broadband product,” said Ratcliffe, who rates Time Warner Cable shares “neutral” and doesn’t own any.
U-verse and FiOS also reported subscriber gains in the first quarter, “confirmation that pay-TV householders are not in a secular decline as perhaps we thought in the third quarter of 2010,” said Paul Sweeney, senior media analyst at Bloomberg Industries. AT&T added 218,000 U-verse users and FiOS added 192,000 video subscribers last quarter.
Time Warner Cable rose 95 cents, or 1.3 percent, to $76.26 at 4:15 p.m. in New York Stock Exchange composite trading. The shares have advanced 15 percent this year.
Quarterly subscription revenue climbed 4.6 percent to $4.63 billion, helped by a gain of 83,000 customers buying the company’s “Triple Play” package, which combines broadband, phone and video.
“I am particularly pleased with the performance of our high-speed data product,” Chief Executive Officer Glenn Britt said on a conference call.
Sales rose 5 percent to $4.83 billion. Analysts projected $4.79 billion on average. Residential subscription revenue rose 3.5 percent to $4.32 billion and commercial subscription sales increased 23 percent to $313 million.
Time Warner Cable bought back 12 million shares for $829 million, part of a $4 billion repurchase plan announced in November. The company bought back 8 million shares for $515 million in the previous quarter, and had about $2.7 billion remaining for authorized buybacks at the end of March.
“We continue to generate solid results, invest to further improve the value of our services and return cash to our shareholders,” Britt said in the statement.
Time Warner Cable will evaluate buying Charter Communications’ Los Angeles cable network, Britt said on the call. He added, though, that the number of Time Warner Cable’s subscribers doesn’t “need to be much bigger” and that a lot of the acquisition possibilities “aren’t big enough to move the scale much.”
Charter is hiring investment bankers to handle an auction for its Los Angeles properties, according to a report by Multichannel News earlier this week. Charter doesn’t comment on speculative transactions, Anita Lamont, a Charter spokeswoman, said in an e-mail.
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