Time Warner Cable Profit Rises on Higher Internet Signups

Time Warner Cable Inc. (TWC), the second- largest U.S. cable-television provider, reported an increase in first-quarter profit after attracting more broadband-Internet subscribers.

Earnings excluding some items rose to $1.30 a share from $1.01 a year earlier, the New York-based company said today in a statement. Sales climbed 6.4 percent to $5.13 billion. Analysts projected earnings of $1.25 a share on sales of $5.16 billion, the average estimates compiled by Bloomberg.

Time Warner Cable is focusing on selling broadband-Web connections to households and businesses as growth in cable-TV signups slows amid rivalry from carriers such as DirecTV. (DTV) Chief Operating Officer Rob Marcus said on a conference call that subscriber numbers this quarter were thus far similar to a year ago, with video customers “weaker” and phone users higher.

“Subscriber net adds were generally better than expected, as higher data and voice adds more than outweighed higher video losses,” James Ratcliffe, a Barclays Capital Inc. analyst with an equalweight rating on the stock, said in a note to clients.

Time Warner Cable added 214,000 residential Internet users, topping the 175,000 estimate of 11 analysts compiled by Bloomberg. The cable provider also added a net 112,000 residential phone subscribers and lost 94,000 video customers, a larger decline than the 70,000 analysts had estimated.

Time Warner Cable fell 1.2 percent to $81.14 at the close in New York. The shares have added 28 percent this year, as the Standard & Poor’s 500 index has gained 11 percent.

2012 Forecast

Chief Financial Officer Irene Esteves said full-year 2012 diluted earnings per share would be “in the upper end” of the $5.25 to $5.50 range the company gave during its fourth-quarter earnings call.

Time Warner Cable estimated free cash flow will rise 20 percent to 25 percent for the year, excluding bonus depreciation. This implies free cash flow of as high as $2.66 billion, ahead of the $2.03 billion estimate of Craig Moffett, an analyst at Sanford C. Bernstein & Co. in New York.

“The earnings guidance is actually pretty good,” said Moffett, who rates the shares outperform. “The only place where they were genuinely pretty soft was video subscribers.”

‘Steady and Predictable’

Net income increased 18 percent to $382 million, or $1.20 a share, from $325 million, or 93 cents a share.

Business-services revenue rose 38 percent to $429 million, in a unit Chief Executive Officer Glenn Britt said was a “standout.”

Britt called the total results “steady and predictable,” a theme that resonates with shareholders, said Moffett.

“Time Warner Cable is a blissfully simple story: generate cash, return cash to shareholders,” Moffett said. “Investors vote with their wallets, and they like the story.”

Time Warner Cable bought back $353 million in shares in the quarter. Britt hinted the company could boost its share repurchases after completing its acquisition of Insight Communications Co. on Feb. 29.

“Now that we have closed the Insight acquisition, our increased cash flow is available to fuel further investments in the business and capital returns to our shareholders,” Britt said in today’s statement.

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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