Time Warner Cable Profit up, Video Sub Losses Down in Fourth Quarter
UPDATED: The second-largest U.S. cable operator reported higher revenue and a 44 percent jump in earnings, which exceeded Wall Street estimates, unveiled a $4 billion stock buyback program and raised its dividend.
NEW YORK - Time Warner Cable lost 50,000 residential video subscribers in the fourth quarter, or 129,000 when excluding gains from acquisitions, fewer than in the year-ago quarter. It was the second consecutive quarter of improved year-over-year subscriber trends.
The second-largest U.S. cable operator, led by chairman and CEO Glenn Britt, on Thursday also posted higher quarterly earnings and revenue, both of which exceeded Wall Street estimates. Plus, TW Cable unveiled a $4 billion stock buyback authorization and raised its quarterly dividend by 17 percent to 56 cents per share in moves that are expected to be cheered by investors. Analysts have in recent days predicted a dividend hike of up to 25 percent.
The cable giant's fourth-quarter earnings of $564 million compared with $392 million in the year-ago period, an improvement of 44 percent. Revenue rose 4 percent to $4.99 billion. The company reported a $11 million decline in premium channel revenue in the quarter though.
TWC lost 129,000 residential video users in existing cable systems in the fourth quarter, but added 79,000 from systems acquired during the quarter, for a net loss of 50,000. It also added 2,000 business service subscribers in the acquisitions. Overall, it ended 2011 with 11.89 million residential video subscribers.
The company's video customer losses in the fourth quarter of 2010 had amounted to 141,000. It had also posted a loss of 128,000 in the third quarter of 2011, improving on the year-ago period decline of 155,000.
In the latest quarter, TWC also added 130,000 high-speed Internet customers, exceeding Wall Street expectations. And the company returned to growth in telephony subscribers.
Full-year 2011 revenue increased 4.3 percent to $19.7 billion
“Time Warner Cable’s 2011 results demonstrate the continued strength of our business amidst rapid change in technology and the consumer marketplace," Britt said. "We have a full slate of strategic and operational initiatives planned for the year ahead, all designed to generate strong cash flow, enable future growth and provide attractive returns to our shareholders.”
Wells Fargo analyst Marci Ryvicker said: "TWC results were better than expected all around - and the $4B share repurchase was unexpected." Her bottom line: "TWC is back!"
Shares of the company rose in early Thursday trading. As of 9:40am ET, the stock was up 0.7 percent at $69.11.
On a conference call, Britt said TWC has "not seen a huge impact on our video subscription business" from online video viewing, but is paying attention to the space.
President and COO Rob Marcus said that new subscriber connects in the fourth quarter were 3 percent above the year-ago period, and subscriber momentum early in 2012 is somewhat better than last year. But he reiterated that economic and competitive challenges continue. "The operating environment remains tough," he said.
Amid the continuing economic malaise, Britt said TWC will continue to avoid one-size-fits-all offers, but will take tailored approaches in its service offerings.
CFO Irene Esteves on the call predicted that 2012 growth in programming costs per subscriber would accelerate to 8 percent-9 percent.