Time Warner Cable Inc., 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 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.
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 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. 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.’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.