Time Warner Cable Profit Tops Estimates on Internet Gains

Time Warner Cable Inc. (TWC), the second- largest U.S. cable-television provider, reported second-quarter profit that beat analysts’ estimates after gaining broadband Internet subscribers.

Net income rose to $452 million, or $1.43 a share, from $420 million, or $1.24, a year earlier, the New York-based company said today in a statement. Excluding one-time items, earnings per share were $1.48. Analysts projected $1.38, the average of estimates compiled by Bloomberg.

Time Warner Cable is successfully marketing its Internet product as both a stand-alone service and in a bundle with cable TV and phone. The company added 59,000 residential broadband subscribers, while AT&T Inc. (T) lost 96,000 subscribers and Verizon Communications Inc. (VZ) gained 2,000.

“Time Warner Cable results were solid, with better-than- expected profitability as costs were kept in check, but slightly weaker subscriber performance,” James Ratcliffe, a New York- based analyst at Barclays Capital Inc., said in a note to clients.

Time Warner Cable shares climbed 2.7 percent to $87.94 at the close in New York. The stock has risen 38 percent this year, ranking it second among the 16 companies in the S&P 500 Media Index. (S5MEDA)

Time Warner Cable lost 169,000 residential video subscribers, more than the 143,000 estimate of 14 analysts surveyed by Bloomberg, and added 45,000 phone customers. The second quarter is seasonally weak for most cable companies as college students cancel subscriptions for the summer vacation.

Sales Gain

Sales rose 9.3 percent to $5.4 billion, topping the average estimate of $5.38 billion. This is the first quarter that includes three months of revenue from Insight Communications Co., an acquisition completed in February.

Chief Financial Officer Irene Esteves confirmed the company was on pace to meet or exceed its full-year forecast on earnings per share and free cash flow growth. Time Warner Cable expects 2012 earnings to be in the “upper range” of $5.25 to $5.50 a share, she said on a conference call. Free cash flow will grow between 20 percent and 25 percent, she said.

Time Warner Cable said 2012 programming costs per subscriber would increase 6 percent to 7 percent, less than the company’s previous forecast for 8 percent to 9 percent.

Time Warner Cable also repurchased $440 million of its own shares last quarter, up from buybacks of $353 million in the previous three months.

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