Time Warner Cable Posts Mixed Fourth-Quarter Results, Outlook

Glenn Britt | Time Warner Cable
Sylvain Gaboury/PatrickMcMullan.com/Sipa Press/Newscom

2010 Pay: $17.4 million (+9.4% from 2009)
Time Warner Cable stock change for fiscal year: +59.5%

UPDATED: The stock of the second-largest cable operator in the U.S. fell sharply after the firm provided lower-than-expected guidance.

Time Warner Cable on Thursday reported slightly better-than-expected fourth-quarter earnings, but its stock fell more than 10 percent as the company once again lost video subscribers, signed up fewer than expected broadband users and provided an outlook that disappointed Wall Street.

Time Warner Cable shares trended about 3 percent lower in pre-market activity as analysts highlighted that broadband customer additions came in below expectations and initial guidance for 2013 earnings growth was also lower than many had hoped. "The stock is likely to trade off more on the forward [guidance] versus the fourth-quarter results," said Wells Fargo analyst Marci Ryvicker.

The second-largest cable operator in the U.S., led by CEO Glenn Britt, later told analysts during a conference call that higher programming costs and a lack of political advertising, which boosted last year, will be key factors dampening profitability this year.

The stock closed down 11.3 percent at $89.34.

Britt told the call though that the management of content costs is one key reason why TW Cable has spent money on a regional sports networks for the L.A. Lakers and the L.A. Dodgers. "We do not pretend that these deals are inexpensive," he said. But they help “minimize and stabilize the cost over a long time period."

TWC lost 126,000 video subscribers in the latest period. That compared to a decline of 155,000 in the year-ago quarter.

TWC added 89,000 total broadband subscribers. That was "below our 100,000 estimate, as higher prices were a slightly greater drag than expected," said Barclays Capital analyst James Ratcliffe.

The company said its earnings came in at $513 million, down from $564 million in the year-ago period. But adjusted quarterly profit of $479 million was up 7.2 percent and slightly ahead of analysts' expectations. The adjusted figure excludes one-time items. Revenue rose 9.9 percent to $5.5 billion.

Ratcliffe said that operating profit margins "were impacted by higher-than-expected net outlays associated with the new L.A. regional sports network, partially offset by lower programming cost."

The company also raised its quarterly dividend by 16 percent to 65 cents per share.

Email: Georg.Szalai@thr.com

Twitter: @georgszalai